California Clinics, Lab, and Their Owners Pay $10M to Resolve False Claims, Kickback, and Stark Law Allegations
On December 26, the DOJ announced that medical clinics, a lab, and the owners will pay $10 million to settle allegations that they submitted false claims to Medicare and California’s Medicaid program, Medi-Cal, in violation of the Anti-Kickback Statute (AKS) and Stark Law (Physician Self-Referral Law).
The defendants include Southern California Medical Center (SCMC), R & B Medical Group Inc., doing business as Universal Diagnostic Laboratories (UDL), Mohammad Rasekhi M.D., (the founder and chief medical officer of SCMC and the co-owner of UDL), and Sheila Busheri (the chief executive officer of SCMC and the co-owner and chief executive officer of UDL). The federally qualified health center, SCMC, operates six clinics in Southern California. UDL is a reference and esoteric lab in Southern California.
According to the government, defendants paid kickbacks to marketers to refer Medicare and Medi-Cal beneficiaries to SCMC clinics in violation of the Anti-Kickback Statute (AKS). They also offered kickbacks to third-party clinics through above-market rent payments, free or discounted services for clinic staff, and forgiveness of balances owed by patients and clinic staff in exchange for referring Medicare and Medi-Cal beneficiaries to UDL for laboratory tests. In addition, defendants referred Medicare and Medi-Cal beneficiaries from SCMC clinics to UDL for laboratory tests, in violation of the Stark Law’s prohibitions on self-referrals.
The AKS prohibits individuals involved in federal health care programs from knowingly and willfully offering or paying any form of remuneration in exchange for referring a patient to, or arranging for the provision of, items or services reimbursed by a federal health care program. Similarly, the Stark Law bars physicians from referring patients for “designated health services,” including “clinical laboratory services,” covered by Medicare or Medicaid to entities with which the physician or their immediate family has a financial relationship, unless a specific exception applies. Payment under federal healthcare programs must comply with the AKS and Stark Law.
Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division said: “Kickback and self-referral schemes risk impairing the judgment of healthcare providers and diminish the reliability of the care that they render. This resolution upholds the department’s commitment to ensuring that Medicare and Medicaid beneficiaries receive care that is untainted by the providers’ financial interest.”
The $10M settlement resolves claims brought under the qui tam or whistleblower provisions of the False Claims Act by Ferzad Abdi, Julia Butler, Jameese Smit and Karla Solis. These individuals were former employees or managers of SCMC and UDL. Qui tam provisions permit a private party (a “relator”) to file an action on behalf of the United States and receive a portion of the recovery. The relators’ qui tam case is captioned United States ex rel. Abdi v. Rasekhi, No. 18-cv-03966 (CDCA). Alongside this announcement, the relators separately settled with the defendants for $5 million to resolve additional allegations in their qui tam complaint. The relators’ portion of the two settlements has not been announced.
If you would like to learn more about health care fraud, the False Claims Act, or what it means to be a whistleblower, please contact us. We will connect you with an experienced member of our whistleblower team.
Tagged in: Anti-Kickback and Stark, False Claims Act, Medicaid, Medicare, qui tam,