On May 14, the U.S. Attorney’s Office for the Eastern District of California announced that Community Health System and its affiliate Physician Network Advantage Inc. (PNA) agreed to pay $31.5 million to resolve whistleblower allegations that they violated the False Claims Act through the payment of illegal kickbacks to physicians.
The case stems from a qui tam suit filed by whistleblower Michael Terpening, who is set to receive approximately $5 million of the settlement.
According to the government, Community Health System and PNA “provided several types of extravagant benefits to induce physicians in the Fresno area to refer their patients to Community facilities for medical services, in violation of the False Claims Act.”
For example, the government alleges that “In a custom-built lounge located on premises at PNA’s offices, known as HQ2, PNA provided expensive wine, liquor, cigars, and meals to referring physicians, with the knowledge and funding of Community.”
Further allegations include claims that “Community and PNA provided financial subsidies for electronic health records technology and equipment used by certain physicians in their private offices in return for the referral of governmental health care program patients to Community” and that “Community paid bonuses to certain physicians ostensibly for participation in clinical integration activities, when the real purpose of the bonuses was to reward referrals.”
The government contends that these alleged actions violated both the Anti-Kickback Statute and the Stark Law.
“We cannot allow medical decisions to be distorted by kickback schemes or efforts to buy physicians’ loyalty with lucrative side perks,” said Acting U.S. Attorney Michele Beckwith. “This settlement demonstrates this Office’s commitment to ensuring that patients’ best interests remain paramount.”
The False Claims Act’s qui tam provisions enable private citizens and private parties 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.
During FY 2024, settlements and judgments under the False Claims Act exceeded $2.9 billion and over $2.4 billion of the recoveries stemmed from qui tam whistleblower lawsuits. Furthermore, according to the government, a record 979 qui tam lawsuits were filed in FY 2024.
However, in September 2024, a district judge in Florida ruled that the False Claims Act’s qui tam provisions were unconstitutional. The U.S. federal government is urging the U.S. Court of Appeals for the Eleventh Circuit to reverse that decision, stating in a brief that “other than the district court here, every court to have addressed the constitutionality of the False Claims Act’s qui tam provisions has upheld them.”
National Whistleblower Center has issued an Action Alert allowing whistleblower supporters to write the members of Congress urging them to protect and strengthen and protect the False Claims Act.
The claims asserted in this case are allegations only, and there has been no determination of liability.
Join NWC in Taking Action:
Strengthen the False Claims Act and Protect it From Attack
Further Reading: