New Jersey-based Home Health Agency Operator BAYADA has agreed to pay $17 million to resolve whistleblower allegations of false claims billed to Medicare as a result of a kickback scheme. According to a September 8 U.S. Department of Justice press release, BAYADA Home Health Care Inc., and BAYADA Health LLC and BAYADA Home Care (collectively, BAYADA) bought two Home Health Agencies (HHAs) from a retirement home operator, allegedly in return for patient referrals. The government alleged that BAYADA intended the purchases of the HHAs as a kickback for inducement of referrals across the U.S. The names of the other entities involved in the False Claims Act suit are not currently known, as they remain under seal.
The government alleged that between January of 2014 and October of 2020, BAYADA attempted and succeeded at inducing referrals from the unnamed retirement home operator, violating the Anti-Kickback Statute of the False Claims Act. While the Anti-Kickback Statute is most often used to prohibit the payment of traditional kickbacks in the form of either cash or favorable treatment, it also disallows purchases as a form of healthcare kickbacks. The press release clarifies that “[t]he prohibition extends to asset purchases that are intended to induce referrals.” By billing Medicare, a federal medical program, for services allegedly obtained through a kickback scheme, the government claims that BAYADA submitted false claims, thus violating the False Claims Act.
Medical kickback schemes risk individual patient harm: they also sow distrust in the American medical system. “When healthcare providers make or induce referrals that are based on kickback arrangements rather than the best interests of patients, they risk patient harm, threaten the integrity of federal healthcare programs and violate federal law,” said Acting U.S. Attorney Rachael A. Honig for the District of New Jersey. “The U.S. Attorney’s Office for the District of New Jersey and our partners in the Department of Justice and at the Department of Health and Human Services Office of Inspector General will continue to pursue those who, like BAYADA, offer kickbacks for patient referrals, no matter the disguise those kickback arrangements might wear.”
David Freedman, the whistleblower, otherwise known as a relator in qui tam cases, served as the former “director of strategic growth” for BAYADA between 2009 and 2016. The False Claims Act allows individuals to file qui tam lawsuits on behalf of the government, entitling them to a portion of the total amount recovered if the suit results in a settlement or finding of liability. While liability was not determined in this case, Freedman will receive an award of over $3 million for his part in bringing the alleged kickback scheme to light. In a successful qui tam lawsuit, whistleblowers may receive an amount equal to 15 to 30% of the total amount recovered by the government. August and September have been big months for False Claims Act settlements, with WNN reporting on four other successful cases in the last month alone. This case is another example of how the False Claims Act effectively incentivizes whistleblowers to step forward and report medical fraud when they see it in the workplace.