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Catch of the Week: Bayada Home Health Care Settles Kickback Allegations for $17 Million in Case Demonstrating that Kickbacks Come in Many Forms

Posted  September 17, 2021

Last week, Bayada Home Health Care, Inc., a national home health company with more than $1.5 billion in reported revenues and offices in twenty-two states, agreed to pay the United States $17 million to settle allegations that it violated the federal Anti-Kickback Statute (AKS).  The AKS prohibits paying illegal remuneration in any form to induce business or referrals paid for with federal health care dollars, and the Bayada case demonstrates that unlawful remuneration can wear many different disguises.

The lawsuit, which was brought by a whistleblower under the False Claims Act, alleged that Bayada purchased two Arizona home health agencies from a national retirement home operator to induce the operator to refer individuals living in the operator’s other retirement homes to Bayada.  Home health services are overwhelmingly paid for by Medicare and Medicaid and whistleblowers have proven instrumental in ensuring that home health companies don’t cheat the government or short-change patients.  The Bayada whistleblower, who served as the company’s director of strategic growth, will receive $3.06 million of Bayada’s $17 million settlement pursuant to the False Claims Act’s qui tam provision.

The settlement is noteworthy for the type of kickback at issue.  Typically, a kickback conjures images of discrete amounts of cash being funneled to providers with the expectation that those providers will refer their patients to the person or company paying the kickback.  The largest anti-kickback settlements have involved this type of behavior.  In 2014, for example, dialysis provider DaVita paid $400 million to resolve allegations that it funneled cash to nephrologists to induce them to refer patients to DaVita dialysis centers.  Just last year, pharmaceutical giant Novartis paid $678 million to settle allegations that in paid doctors inflated “speaking fees” and offered other incentives to induce them to prescribe their drugs to patients.

In contrast, Bayada’s alleged kickbacks did not involve discrete payments to doctors or other providers.  Instead, the kickback was the purchase of assets—two home health agencies in Arizona—allegedly intended to induce the seller to refer residents of its nation-wide network of retirement communities to Bayada.  When announcing the settlement, DOJ emphasized that asset purchases can be illegal kickbacks and vowed “to pursue those who offer kickbacks for patient referrals, no matter the disguise those kickback arrangements might wear.”  The settlement should stand as a warning that the AKS remains a powerful tool to protect patients’ healthcare decisions from being influenced by the financial interests of their providers and other gatekeepers—and that the government is wise to creative kickback schemes.

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Tagged in: Anti-Kickback and Stark, Catch of the Week, FCA Federal, Healthcare Fraud, Home Health and Hospice, Whistleblower Case,