Covenant Healthcare Whistleblower’s Disclosure Leads to $69 Million False Claims Act Settlement

Covenant Healthcare

On March 29, the Department of Justice announced that Covenant Healthcare paid $69 million to settle possible False Claims Act violations. Covenant Healthcare is a regional hospital system in Saginaw, Michigan where it is the largest employer in the county. It paid the settlements following allegations of “improper financial relationships” with eight physicians and a physician-owned investment group that led to the submission of false claims to Medicare, Medicaid, TRICARE, and FECA programs. 

The allegations came to light from the whistleblower Dr. Stacy Goldsholl. Dr. Goldsholl previously served as the Executive Administrator and Chief Medical Officer of a division within the hospital system. The qui tam provisions of the False Claims Act enable private citizens to file lawsuits on behalf of the government if they know of an individual or company defrauding the government. Qui tam whistleblowers are eligible to receive between 15 and 30% of the government’s recovery. Dr. Goldsholl will receive a combined $12,384,927.36 from the settlements.

The settlement, which began with Dr. Goldsholl’s claims in 2012, was finalized in 2021 but kept confidential while the Department of Justice continued investigations into electrophysiologist Dr. Asim Yunus and neurosurgeon Dr. Mark Adams. In the end, Dr. Adams agreed to pay the United States $406,551.15, and Dr. Yunus will pay $345,987.54. 

The Department of Justice additionally utilized the Anti-Kickback Statute (AKS) and the Physician Self Referral Law (commonly known as the Stark Law) in its investigation of Covenant Healthcare and the physicians in question. Both laws deter the existence of financial incentives in federally funded programs that act against patients’ interests. 

Covenant has paid the United States $67,191,436.39 and the State of Michigan $1,808,563.61 to settle allegations. 

United States Attorney Dawn N. Ison announced the settlement and emphasized the importance of detecting and deterring this kind of fraud: “improper financial relationships and kickbacks undermine the integrity of federally-funded healthcare programs by influencing physician decision making.” U.S. Attorney Ison continued by saying that “this outcome emphasizes our Office’s commitment to pursuing justice against parties on both sides of those relationships—the hospital seeking to influence the physician via certain compensation schemes and the physician accepting the compensation.” U.S. Attorney Ison added finally, “I would like to commend the new leadership at Covenant for making things right once its past wrongdoing was brought to its attention by federal investigators.”

Special Agent in Charge Scott Pierce of United States Postal Service Office of Inspector General, Central Area Field Office commented on the importance of cases like this: “these settlements send a clear message to healthcare providers that the government is vigilantly protecting federal benefit programs.” 

Further Reading:

Covenant Healthcare System and Physicians Pay Over $69 Million to Resolve False Claims Act Allegations Related to Improper Financial Relationships

More False Claims Act Whistleblower News

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