Catholic Health Pays Over $3M to Resolve False Claims Act Allegations
By the Constantine Cannon Whistleblower Team
On May 16, U.S. Attorney Michael DiGiacomo announced that Catholic Health System, Inc. (CHS) agreed to pay $3,293,122.66 to settle False Claims Act allegations that it knowingly submitted or caused the submission of false claims to the Medicare program by engaging in improper financial relationships with physicians in violation of the Stark Law1.
About The Stark Law
The Stark Law prohibits hospitals or other healthcare providers from billing Medicare for services referred by physicians with whom they have a financial relationship, unless those relationships meet strict exceptions. Under the Stark Law, “referrals” are limited to specific types of medical services, such as lab testing, hospital services, prescription drugs, and durable medical equipment, defined as “designated health services.” The Stark Law aims to ensure physician referrals are based on patient need and prevent financial incentives from tainting medical judgment.
CHS Allegedly Entered into Improper Financial Relationships
Here, the government alleges that CHS and its affiliates maintained financial relationships with non-employee physicians who referred patients for hospital services, medical supplies, and laboratory testing. CHS then billed Medicare for the referred services. The government alleged that these physician compensation agreements did not meet narrow exceptions to the Stark Law.
The Whistleblower In This Case
The settlement resolves claims brought by whistleblower Gary Tucker under the qui tam (or whistleblower provisions) of the False Claims Act. Private parties can file lawsuits on behalf of the government and receive up to 30% of any monetary recovery. In this case, Tucker will receive an undisclosed portion of the settlement.
U.S. Attorney DiGiacomo commented: “The Stark Law is designed to protect Medicare by ensuring that physician referrals are not influenced by financial interest. This office is committed to holding health care providers accountable who engage in such conduct.”
Healthcare fraud enforcement remains a top government priority. The DOJ’s 2024 annual roundup of False Claims Act successes showed that of the $2.9 billion the government and whistleblowers recovered during the last fiscal year, over $1.67 billion (58%) came from matters involving healthcare fraud. Four out of 2024’s top 10 healthcare fraud recoveries involved Anti-Kickback Statute violations.
Our Firm Helps Anti-Kickback Statute and Stark Law Whistleblowers
Whistleblowers play a key role in exposing Kickback schemes and Stark Law violations. As whistleblower partner Marlene Koury commented: “Healthcare fraud schemes involving kickback and improper referrals are unfortunately widespread throughout the industry. From hospitals to specialty pharmacies, we have seen creative attempts to circumvent the law at all levels of patient care.”
Common schemes include:
- Hospitals, nursing homes, labs, dialysis centers, drug or DME companies offering referring doctors the opportunity to buy into businesses or other opportunities on favorable financial terms
- Hospitals offering physicians below-market-rate rent for office space
- Drug companies paying kickbacks to pharmacies (retail or specialty) to induce them to switch patients’ prescriptions
- Medical device manufacturers offering incentives to physicians who use their products – just to name a few.
If you would like to learn what it means to be a whistleblower, believe you have information relating to Stark Law violations or healthcare fraud, please contact us so we can connect you with a member of the Constantine Cannon whistleblower lawyer team for a free and confidential consultation.
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Sources
1 See https://www.justice.gov/usao-wdny/pr/catholic-health-agrees-pay-nearly-33-million-resolve-alleged-false-claims-act
Tagged in: Anti-Kickback and Stark, False Claims Act, qui tam,