Sham “Medical Directorships” Lead to $17 Million Whistleblower Suit
Just days ago we warned that the Department of Health and Human Service’s Office of Inspector General (OIG) issued a rare fraud warning letter. The OIG said the government was scrutinizing phony medical directorships as possible violations of the False Claims Act and the federal Anti Kickback law. In connection with that warning, the government just announced a record $17 million settlement against a nursing home chain.
The violation? The nursing homes were accused of disguising kickbacks as medical directorship payments.
Hebrew Homes Health Network, also known as Plaza Health Network, was accused of having medical directors that were nothing more than “ghost positions.” The Justice Department says the company created medical director positions at their facilities as a way to funnel kickbacks to doctors. The physicians recruited to fill these positions had no real duties or responsibilities, however. Instead they were being paid to refer patients. (The company was allowed to settle without admitting any wrongdoing.)
In announcing the settlement, the Justice Department’s Deputy Attorney General, Benjamin Mizer, said, “Illegal inducements paid to physicians in exchange for patient referrals will not be tolerated. Medicare funds should be used to provide care for our senior citizens, not as an inducement to physicians to refer business.”
The case was brought by the company’s former CFO, Stephen Beaujon. He will receive a whistleblower award of over $4 million.
Beaujon filed his claim under the federal False Claims Act, a Civil War era statute that pays whistleblowers up to 30% for their information.
Violations of the Anti-Kickback statute often qualify for whistleblower awards. Congress passed two anti-kickback measures hoping to protect patients and the federal health care programs from fraud and abuse by curtailing the corrupting influence of money on health care decisions. Paying for referrals tends to cause overutilization.
To claim an award, a whistleblower must have original source information about fraud involving a federal program. (Nursing homes receive federal Medicare monies and therefore qualify.)
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