On June 16, 2015, the Department of Justice (“DOJ”) announced a record-setting $17 million settlement with a Florida skilled nursing facility over allegations that the facility violated the Antikickback Statute (“AKS”) and False Claims Act (“FCA”). The AKS (42 U.S.C. § 1320a-7b), a criminal statute with significant civil money penalties attached, prohibits the exchange of anything of value intended to induce or reward referrals for federal healthcare program business. The False Claims Act (31 U.S.C. §§ 3729–3733) makes a person liable to the United States Government for a civil penalty if that person or company defrauds a government program. With the passage of PPACA, Congress added teeth to the language of the Anti-Kickback Statute by providing that claims submitted in violation of the Anti-Kickback Statute automatically constitute false claims under the False Claims Act. 42 U.S.C. § 1320a-7b(g).
In the recently announced DOJ settlement, the government alleged Hebrew Homes Health Network Inc. violated the Anti-Kickback Statute, and thus, the False Claims Act. From 2006 through 2013, Hebrew Homes hired many physicians as medical directors. Under their medical directorship contracts, they were required to perform many job duties and meet hourly requirements, for which each physician was paid thousands of dollars monthly. However, these positions did not truly exist; the medical directors were not required to perform any of their duties. Instead, the DOJ alleged, they were paid for referring patients to Hebrew Homes – a direct violation of the Anti-Kickback Statute, § 1320a-7b(b), and a per se violation of the False Claims Act. § 1320a-7b(g).
The former CFO of Hebrew Homes, Stephen Beaujon, filed a qui tam lawsuit against Hebrew Homes for violating the Anti-Kickback Statute and False Claims Act. Under the qui tam provision of the False Claims Act, 31 U.S.C. § 3730(b), a private citizen may sue on behalf of the government for False Claims. In return, the private citizen will receive from 15-25% of the proceeds from any claim or settlement amount. 31 U.S.C. § 3730(d).
In response to the filing of the lawsuit, Hebrew Homes and its Executive Director, William Zubkoff, have agreed to a settlement to resolve the allegations. Hebrew Homes has agreed to pay $17 million, entered into a five-year corporate integrity agreement (available here) with the U.S. Department of Health and Human Services Office of Inspector General, and agreed to change its policies on hiring medical directors. Zubkoff has agreed to resign as Executive Director and to no longer be an employee with Hebrew Homes. Of the $17 million, Beaujon, the whistle blower who brought the action, will receive $4.25 million.
This settlement is just one of the many examples demonstrating the DOJ’s renewed focus on AKS schemes and health care fraud. Since 2009, the Justice Department has received more than $15 billion through the False Claims Act with cases involving health care fraud.
In the wake of the Hebrew Homes settlement, healthcare providers and facilities must ensure that any arrangement where there exists a potential for referrals fits within an AKS safe harbor. If you have questions regarding the Hebrew Homes settlement or the AKS generally, please do not hesitate to contact Briar Siljander or Jennifer Gross at 810-227-3103.