April 28, 2017

DOJ Catch of the Week — Indiana University/HealthNet

By the C|C Whistleblower Lawyer Team

This week’s Department of Justice “Catch of the Week” goes to Indiana University Health Inc. and HealthNet Inc.  Yesterday, they agreed to pay $18 million to resolve allegations they violated the False Claims Act and Anti-Kickback Statute by engaging in an illegal kickback scheme related to the referral of HealthNet’s OB/GYN patients to IU Health’s Methodist Hospital.  Under the terms of the settlement, IU Health and HealthNet each will pay roughly $5.1 million to the United States and $3.9 million to the State of Indiana. See DOJ Press Release.

According to the government, IU Health provided HealthNet with an interest-free line of credit, the balance of which consistently exceeded $10 million, and HealthNet was not expected to repay a substantial portion of this loan.  The government alleged this financial arrangement was intended to induce HealthNet to refer its OB/GYN patients to IU Health’s Methodist Hospital.  Providing this kind of consideration to induce referrals for services paid by a federal health care program, such as Medicare or Medicaid, is prohibited under the Anti-Kickback Statute.  And claims submitted under these programs that violate this statute are false claims under the False Claims Act.

In announcing the settlement, the government made clear its commitment to crack down on this kind of kickback scheme “which undermines public confidence in our health care system.”  According to U.S. Attorney Joshua Minkler for the Southern District of Indiana: “Waste, fraud, and abuse can never be tolerated and tear at the fabric of first-class healthcare in this country.”

The allegations originated in a whistleblower lawsuit filed under the qui tam provisions of the False Claims Act by Dr. Judith Robinson, who formerly held a number of positions at both Methodist Hospital and HealthNet.  She will receive a whistleblower award of roughly $2.8 million from the proceeds of the government’s recovery.

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