On August 31, the U.S. Department of Justice (DOJ) announced that Watermark Retirement Communities LLC, an Arizona-based senior living community operator, agreed to pay $4.25 million to resolve allegations that it violated the False Claims Act (FCA). The DOJ alleged that Watermark violated the FCA “by soliciting and receiving a kickback from a nationwide home health agency (HHA) operator in order to facilitate referrals from Watermark retirement homes.”
The settlement stems from a qui tam whistleblower suit filed by David Freedman, who was the former director of strategic growth for the HHA operator between 2009 and 2016. The False Claims Act’s qui tam provisions 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. Freedman will receive approximately $765,000 as his share of the federal recovery.
According to the DOJ, “The Antikickback Statute prohibits parties who participate in federal health care programs from knowingly and willfully soliciting or receiving any remuneration in return for referring an individual to, or arranging for the furnishing of any item or services for which payment is made by, a federal health care program.”
The DOJ alleges that “the HHA operator purchased two of Watermark’s HHAs in Arizona to induce referrals of Medicare beneficiaries living in Watermark residential communities. The scheme was designed around eight Watermark retirement homes in five states (Arizona, Connecticut, Delaware, Florida and Pennsylvania) where the two companies had overlapping operations.”
“It is imperative that decisions about the care provided to federal health care beneficiaries are not undermined by the payment of kickbacks,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “Today’s resolution demonstrates that the Department is committed to holding accountable not only those who offer kickbacks but also those who receive them.”
“Whether you pay them or receive them, kickbacks undermine the integrity of our health care system,” said U.S. Philip R. Attorney Sellinger for the District of New Jersey. “Patients need to know the health care referrals they receive are in their best interest, not in the best interest of someone else’s bottom line. Our office will always be on guard to prevent unscrupulous operators from trying to take financial advantage of our health care system.”
On July 25, a bipartisan group of senators introduced the False Claims Amendments Act of 2023, which address a few technical loopholes undermining the success of the FCA. The bill is widely supported by whistleblower advocates.
“The False Claims Act is America’s number one fraud-fighting law,” said whistleblower attorney Stephen M. Kohn. “These amendments are urgently needed to ensure that whistleblowers can continue to play their key role in protecting taxpayers from corporate criminals.”