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Whistleblower to receive $1.6 million in False Claims Act case

"Patients and taxpayers rightly should expect that referrals be based on sound medical judgement, not driven by thinly veiled bribes, as alleged here," said a spokesperson for the U.S. Department of Health and Human Services Office of Inspector General.

Maintaining the integrity of medical decision-making is one of the main reasons behind the Anti-Kickback Statute and the Physician Self-Referral Law (Stark Law). The Anti-Kickback Statute prohibits offering, soliciting, paying or receiving money in order to induce referrals of services or items covered by federally funded health programs like Medicare and Medicaid. The Stark Law prohibits hospitals from billing Medicare for services referred by doctors when the hospital has an improper compensation arrangement with those doctors.

Recently, the Justice Department announced an $8.1-million settlement with California-based Avanti Hospitals LLC and six of its owners. The government alleged that Avanti and its subsidiary, Memorial Hospital of Gardena, submitted claims to Medicare and Medicaid for services referred in violation of the Anti-Kickback Statute and the Stark Law. Knowingly submitting such claims violates the federal False Claims Act.

Specifically, the defendants hired a doctor as a medical director for a salary that exceeded the fair market value for his services. This was done in an attempt to give him an incentive to refer patients to Gardena Hospital. In addition to the monetary settlement, Avanti and Gardena Hospital have also agreed to enter into a corporate integrity agreement with the U.S. Department of Health and Human Services Office of Inspector General.

"Illegal kickbacks paid to doctors for referrals burden our healthcare system, drive up insurance costs for everyone, and corrupt the doctor-patient relationship," commented a U.S. attorney involved in the case. "Patients are not commodities who can be sold to the highest bidder, especially when the bills are ultimately being paid by American taxpayers."

Physician/former CEO of Gardena Hospital blew the whistle

Under the federal False Claims Act and equivalent state laws, private citizens are empowered to file lawsuits on behalf of the government when they have evidence of fraud, waste, abuse or mismanagement. When these lawsuits are successful, the whistleblower receives a substantial percentage of any monetary recovery on behalf of the government. In this case, the whistleblower was the former CEO of Gardena Hospital. He will receive approximately $1.6 million as his reward.

If you work in healthcare or another field involving government contracting, you could be in a position to blow the whistle on false claims in exchange for a reward. Before you take any concrete steps, discuss your situation with an attorney familiar with whistleblower claims. This can protect your right to receive compensation and limit your exposure to retaliation.

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