On May 16, the U.S. Attorney for the Western District of New York announced a nearly $3.3 million settlement with Catholic Health System, Inc. (CHS) to resolve whistleblower allegations that CHS violated the False Claims Act (FCA) by knowingly submitting or causing to be submitted false claims to the Medicare program that were the result of violations of the Stark Law.
The case stems from a qui tam lawsuit filed by a whistleblower, who will receive a portion of the settlement.
Under the Stark Law, also known as the Physician Self-Referral Law, healthcare entities are prohibited from obtaining reimbursement from Medicare for certain health services when those services were referred by a physician who has a financial relationship to the healthcare entity.
According to the government, “CHS and its affiliated hospitals had financial relationships with non-employee physicians” who “then referred health services, such as laboratory testing, hospital services, or medical supplies, to CHS and its affiliated hospitals.” The government alleges that CHS violated the FCA when it then “billed Medicare for the referred services.”
The government claims that CHS’s financial arrangements did not meet any of the exceptions to the Stark Law “because they were not commercially reasonable, or the compensation received by the physicians exceeded fair market value for the administrative services they provided.”
“The Stark Law is designed to protect Medicare by ensuring that physician referrals are not influenced by financial interest,” stated U.S. Attorney Michael DiGiacomo. “This office is committed to holding health care providers accountable who engage in such conduct.”
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.
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Strengthen the False Claims Act and Protect it From Attack
Further Reading:
Catholic Health agrees to pay nearly $3.3 million to resolve alleged False Claims Act violations