$45.6 Million Settlement in False Claims Act Case Against Nursing Facility Defendants

The DOJ recently announced another settlement of a False Claims Act case against skilled nursing facilities (SNFs).  This time, it was a $45.6 million settlement of a False Claims Act case that the government brought against six SNFs; a management company called Paksn Inc.; and Prema Thekkek, the owner.  The six SNFs do business as (i) Bay Point Healthcare Center (Kayal Inc.); (ii) Gateway Care & Rehabilitation Center (Nadhi Inc.); (iii) Hayward Convalescent Hospital (Oakrheem Inc.); (iv) Hilltop Care and Rehabilitation Center (Bayview Care Inc.); (v) Park Central Care & Rehabilitation Center (Aakash Inc.); and (vi) Yuba Skilled Nursing Center (Nasaky Inc.).

The DOJ intervened in this False Claims Act case, which “stem[med] from a whistleblower complaint filed in 2015 by Paksn’s former Vice President of Operations and Chief Operating Officer.”  The case alleged that the defendants violated the False Claims Act by “paying kickbacks”—in the form of “medical directorship agreements”—“to physicians to induce patient referrals” to the SNFs, according to the DOJ.  In the DOJ’s words, the “defendants hired physicians who promised in advance to refer a large number of patients to the SNFs, paid physicians in proportion to the number of their expected referrals and terminated physicians who did not refer enough patients.”  The DOJ press release highlights a few examples of the allegations:

• “On one occasion, a Paksn employee told Thekkek that two physicians were being hired because ‘they are promising at least 10 patients for $2000 per month,’ to which Thekkek responded, ‘good job. Make sure they give you patients everyday. [W]e can also expand to other buildings with them, if possible.’”
• “On another occasion, an employee informed Thekkek that the defendants previously had paid a certain doctor ‘$1500 each month and he only send [sic] us 2 patients[,] so we didn’t pay him anything from Jan[uary] onwards.”
• “On a third occasion, Thekkek rejected a proposed stipend for a new medical director, explaining that the defendants had paid the previous medical director that amount because ‘we were getting admission[s] from him,’ whereas she did not expect the new medical director to refer many patients.”
• “Thekkek complained that if her employees did not pay medical directors promptly every month, ‘[t]hese doctors will not give us patients.’”

Kickback agreements like those alleged in this case are common bases for False Claims Act cases brought by whistleblowers and the government.  Employees of healthcare companies who are privy to conversations or emails that may suggest kickbacks or other violations are occurring are often in the best position to uncover the claimed misconduct and bring a False Claims Act case.  Successful whistleblowers can be awarded up to 30% of the government’s recovery.  Over the past 25 years, whistleblowers have recovered billions of dollars in whistleblower rewards under the False Claims Act and have been responsible for tens of billions of dollars in government recoveries.

If you would like more information on what it means to be a whistleblower or think you may have information relating to healthcare or pharmaceutical fraud, fraud involving kickbacks, government contract fraud, or any other kind of fraud or misconduct involving a government program, please feel free to 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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