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Miami Nursing Home Settles over Alleged Kickback Scheme

False Claims and Kickbacks

We have continuously seen the importance of whistleblowers in the world of healthcare, and specifically in nursing homes and long-term care facilities. The government typically uses the False Claims Act and the Anti-Kickback Statute to go after such fraud. These laws are implicated where healthcare providers make claims for reimbursement of services to patients and residents insured by federally funded Medicare and Medicaid, yet those claims are for fake services, or consist of overbilling.

They are also implicated where healthcare providers provide kickbacks for referrals of business, such as for prescription drugs, or for patient referrals. These types of activities are illegal. Sometimes insiders at companies or medical providers, who are privy to the illegal activity, can aid the government by reporting it. These whistleblowers not only do a good thing, but can stand to benefit financially, as the False Claims Act provides for whistleblowers to receive a certain percentage of the financial recovery. This rewards their participation, which can be stressful and put their own careers in jeopardy, as well as incentivizes others to come forward.

Kickback Scheme

In Miami, a nursing home agreed to a substantial settlement with the U.S. Department of Justice to pay $17 million over allegations that the company made kickbacks in violation of federal law. The Hebrew Homes nursing home was accused of making financial kickbacks to doctors and medical directors in exchange for making patient referrals. The kickbacks were orchestrated as contractual salaries for these individuals even though their positions did not truly exist at the nursing home. Rather, the home simply paid doctors to send patients to the facility. Such payments in exchange for referrals amount to kickbacks which is illegal. Where federal funds are involved because medical providers (like nursing homes) have patients insured by Medicare or Medicaid, which are federally funded programs, making such claims for reimbursement for these “fake doctors” amount to false claims against the government and a basic theft of taxpayer funds.

In addition to fraud on the government and taxpayers, it is also a terrible affront to patients and facility residents, since Medicare and Medicaid funds should be spent on their care, rather than in a scheme to gain more business. Such fraud can lead to civil and/or criminal prosecution. As with many settlements, the nursing home in this case did not admit liability. It was also reported that in addition to the settlement with DOJ, the nursing home operator also came to an agreement with the U.S. Department of Health and Human Service’s Office of Inspector General to reform its policies to ensure this does not happen again.

Whistleblower started it all

The nursing home company’s chief financial officer was the tipster that alerted the government to the kickback scheme. Under the False Claims Act, individuals can themselves bring a lawsuit on behalf of the U.S. government. This is known as a “qui tam” action. The Department of Justice can then elect to participate as plaintiff, which it did in this case. As a result of the CFO’s participation, he will reportedly earn over $4 million. This case overall demonstrates the importance of enforcing the false claims and kickback laws, as well as the importance of insiders as whistleblowers to root out fraud.

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