Kickbacks in the healthcare field are illegal. The Anti Kickback Statute and Stark law carry hefty penalties for healthcare providers that engage in these illegal schemes. The former owner of a West Palm Beach home healthcare agency is today learning that lesson the hard way.
Mark Conklin is the former owner and operator of two home healthcare businesses, both known as Recovery Home Care. Prosecutors say that Conklin was paying kickbacks to area physicians who referred patients to his businesses.
According to a whistleblower complaint filed by a former employee, Conklin attempted to circumvent the federal Anti Kickback Statute by appointing doctors to be medical directors of field offices operated by Recovery Home Care. Those doctors that referred patients were rewarded by a paid medical directorship.
In actuality, the directorships were a scam. The physicians had no duties or responsibilities Instead they were simply compensated for referring patients.
Medicare only pays for home care services if a physician certifies there is a need for these services. The guidelines require that the doctor certify
- (1)the patient needs skilled nursing care, speech-language
pathology, or physical or occupational therapy;
- (2) the patient is confined to the home (“homebound”); and
- (3) a plan of care has been established by and is periodically reviewed
by a physician.
Here, the physicians were making certifications simply to get the extra compensation from Recovery.
The government claims that the scheme devised by Recovery Home Care violates both the Anti Kickback Statute and the Stark law.
Congress passed the Anti Kickback Statute out of concern that providing things of
value to those who can influence healthcare decisions may corrupt professional
healthcare decision-making and result in federal funds being diverted to pay for goods
and services that are medically unnecessary, of poor quality, or even harmful to a
vulnerable patient population.
The law prohibits anyone from offering or accepting payment to induce or reward someone for referring a patient if the patient’s care is being paid with federal dollars. Because Medicare is taxpayer funded, paying doctors for Medicare referrals is illegal.
The Anti Kickback Statute is actually a criminal law and violations are considered felonies.
Although at first glance, Conklin’s scheme seems rather ingenious, it also violates the federal Stark law. That law prohibits physicians from referring patients to an entity in which they have a financial interest. Because the doctors were getting paid as “medical directors” by Recovery Home Care, they had a financial interest in the referral.
Violations of both the Stark law and Anti Kickback Statute can be prosecuted by whistleblowers under the False Claims Act. Dating back to 1863, the False Claims Act allows a whistleblower to file a lawsuit in the name of the United States. If the government recovers money, the whistleblower can receive up to 30% of whatever the government recovers.
Conklin was fined $1.750 million for his role in the scam. The purchaser of Recovery Home Care already paid $1.1 million to settle.
In announcing the settlement, a Health and Human Services spokesperson said, “Home health agency owners who seek to boost profits by paying kickbacks to physicians in exchange for patient referrals will instead pay for their improper conduct at the settlement table. We will continue to crack down on such illegal, wasteful kickback schemes, which can undermine impartial medical judgment and corrode the public’s trust in the health care system.”
As noted earlier, the case was brought by a whistleblower. Greg Simony worked as a sales rep for Recovery for just nine months. Recognizing that something was wrong, he filed a whistleblower suit under the False Claims Act in November of 2012.
The Justice Department is awarding him $315,000 (or 18%) as his share of the recovery. He is also entitled to a percentage of the settlement with Recovery’s purchaser, National Home Care Holdings.
Anti Kickback Statute and Whistleblower Awards
A violation of the Anti Kickback statute or the Stark law can give rise to a False Claims Act lawsuit and award. To bring such a claim, one must have inside or “original source” knowledge of the illegal kickback scheme.
The False Claims Act contains a public disclosure bar and first to file requirement too. The public disclosure bar is designed to keep folks from filing claims based on public knowledge. Even if you work for the wrongdoer and have inside information, its probably too late if the government already knows about the illegal activity.
The first to file rule is designed to encourage folks to come forward early in the process. The earlier a suit is filed, the quicker the government can take action to stop the illegal behavior. If you have inside information about illegal kickback or referral schemes, don’t wait! If someone files a lawsuit before you, they may well get the entire award.
Successful claimants receive between 15% and 30% of whatever the government recovers. The higher awards are reserved for cases where the whistleblower and his or her counsel do most of the work.
While cases are being investigated, they are under seal meaning they are secret. This allows the government to better investigate and gather necessary evidence.
Need more information? Give us a call. All inquiries are protected by the attorney-client privilege and kept confidential. For more information, please contact attorney Brian Mahany at or by telephone at (direct).
MahanyLaw – America’s Whistleblower Lawyers