On December 26, the U.S. Department of Justice (DOJ) announced that southern California-based clinics, a laboratory and their owners agreed to pay $10 million to settle allegations that they violated the False Claims Act by defrauding Medicare and California’s Medicaid program, known as Medi-Cal, through kickbacks and self-referrals. The case stems from a qui tam whistleblower lawsuit filed by former employees.
According to the government, Mohammad Rasekhi M.D., Sheila Busheri, Southern California Medical Center (SCMC) and R & B Medical Group Inc., doing business as Universal Diagnostic Laboratories (UDL), “knowingly submitted or caused the submission of false claims to Medicare and Medi-Cal by (a) paying kickbacks to marketers to refer Medicare and Medi-Cal beneficiaries to SCMC clinics in violation of the Anti-Kickback Statute (AKS), (b) paying kickbacks to third-party clinics in the form of above-market rent payments, complimentary and discounted services to clinic staff and write-offs of balances owed by patients and clinic staff in exchange for referring Medicare and Medi-Cal beneficiaries to UDL for laboratory tests in violation of the AKS and (c) referring Medicare and Medi-Cal beneficiaries from SCMC clinics to UDL for laboratory tests in violation of the Stark Act prohibition against self-referrals.”
“Kickback and self-referral schemes risk impairing the judgment of healthcare providers and diminish the reliability of the care that they render,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “This resolution upholds the department’s commitment to ensuring that Medicare and Medicaid beneficiaries receive care that is untainted by the providers’ financial interest.”
“Providers who exploit the Medicare, Medicaid and TRICARE programs for their personal financial gain will be held accountable under the False Claims Act,” said U.S. Attorney Martin Estrada for the Central District of California. “This significant resolution evidences our steadfast commitment to ensuring the integrity of federally funded health care programs.”
The qui tam lawsuit was filed by Ferzad Abdi, Julia Butler, Jameese Smit and Karla Solis, who were former employees or managers of SCMC and UDL. Under the False Claims Act’s qui tam provisions, individuals may file lawsuits alleging government contracting fraud on behalf of the United States. In successful qui tam cases, whistleblowers are eligible to receive between 15 and 30% of the settlement or judgment. In this case, the whistleblowers’ share of the recovery has not yet been determined.
