Anti-Kickback Statute Violations: Nonprofit Health System Settles Allegations of False Claims Act, Pays $47.1 million

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Anti-kickback statute as represented by a doctor receiving a bribe

In December 2023 ChristianaCare, a nonprofit health system, agreed to pay $47.1 million in order to settle a Qui Tam case brought forth by Ronald Sherman, the former Corporate Compliance officer of Christiana. The whistleblower alleged that the health system violated the federal and Delaware False Claims Act, as well as the Anti-Kickback Statute by offering kickbacks to private physicians in exchange for patient referrals, and subsequently committing Medicaid Billing Fraud. 

Understanding the Anti-Kickback Statute Violation

Specifically, the case alleges that Christiana provided Neonatology Associates, a private group of physicians, with free professional care services, while the hospital received patient referrals in return. Christiana and Neonatology were both accused of submitting claims to government funded insurers, including Medicaid, as if they had provided the services in question themselves. 

Prior to this case, ChristianaCare signed a “corporate integrity agreement,” as part of a $3.3 million settlement to address a similar suit brought against them. The agreement stipulated that Christiana was required to put programs in place to identify and promote internal reporting of possible anti-kickback law violations. Although the health system agreed to these terms, Ronald Sherman reported that his efforts as CCO of ChristianaCare to investigate probable compliance violations were stifled by the health system’s leaders. Sherman later filed this whistleblower suit accusing Christiana Care of the Anti-kickback and False Claims Act violations described above. Sherman’s whistleblower reward amounted to $12.1 million. 

This is a historical moment for  the Delaware False Claims Act as it is said to be the state’s biggest FCA settlement yet. The FCA settlement was the first of its kind as it stems from a hospital allegedly supplying a private physicians group with free hospital-employee labor in order to receive patient referrals. 

In reaction to this settlement, US Attorney Weiss noted that “The prohibitions on kickbacks and self-referrals in federal healthcare programs are designed to ensure that the medical decisions of healthcare providers are driven by what is in the best interest of patient care, not provider profit. That is true regardless of who provides the care, whether it is a solo practitioner or the largest healthcare system.  My office will continue to vigorously enforce these prohibitions so that Delawareans can receive the care that is appropriate to their medical needs.”

The Risks Associated with Violations of the Anti-Kickback Statute in Health Systems

Engaging in kickback schemes within health systems or hospitals can pose significant dangers and ethical concerns: 

  1. Compromised Patient Care: Kickback schemes may lead to Medical decisions, treatments, or referrals being influenced by financial incentives rather than patient needs, compromising the quality of care.
  2. Erosion of Trust:Patients trust healthcare providers to make unbiased decisions based on their well-being. Kickbacks erode this trust as patients may suspect that their care is influenced by financial motives.
  3. Unnecessary Medical Procedures: Kickback arrangements may incentivize unnecessary medical procedures, tests, or treatments to increase revenue, potentially exposing patients to unnecessary risks and costs.
  4. Anti-Competitive Behavior: Kickbacks may foster anti-competitive practices, influencing healthcare providers to exclude or disadvantage competitors in favor of those involved in the kickback scheme.
  5. Impact on Employee Morale: Staff within the healthcare system may become demoralized if they perceive unethical practices within the organization. This can lead to decreased employee satisfaction and potentially impact the quality of healthcare services.
  6. Compromised Research Integrity: Kickbacks may influence research activities within healthcare institutions, compromising the integrity of clinical trials or research studies. This can have serious implications for the advancement of medical knowledge and patient care.

In summary, engaging in kickback schemes is not only illegal but also exposes healthcare institutions to financial, and reputational risks. It is crucial for health systems and hospitals to uphold ethical standards and prioritize patient care over financial incentives.

Common Questions about Anti-Kickback Statutes

What is the Anti Kickback Act?

The Anti-Kickback Act, also known as the Federal Anti-Kickback Statute, is a federal law that prohibits any form of bribery or reward in exchange for referrals or recommendations for healthcare services paid by federal healthcare programs.

Who enforces the Anti-Kickback Statute?

The Office of Inspector General (OIG) within the Department of Health and Human Services (HHS) is responsible for enforcing the Anti-Kickback Statute.

What is an example of a kickback in healthcare?

An example of a kickback in healthcare could be a pharmaceutical company offering financial incentives to doctors for prescribing their medication over others. This type of arrangement can lead to biased medical decisions and potentially harm patients if they are not receiving the best treatment option based on their individual needs.

What is an example of an Anti-Kickback Statute violation?

The Anti-Kickback Act, also known as the Federal Anti-Kickback Statute, is a federal law that prohibits offering or accepting anything of value in exchange for referrals for healthcare services paid for by government-funded programs such as Medicare and Medicaid. This includes cash, gifts, free meals or services, and even discounted rent or lease agreements.

An example of a kickback in healthcare could be a pharmaceutical company providing financial incentives to doctors in exchange for prescribing their medications to patients. This type of arrangement is illegal and can lead to over-prescribing of certain drugs that may not be the best option for patients.

An example of an Anti-Kickback Statute violation could be a hospital receiving kickbacks from a medical device company in exchange for exclusively