Whistleblowers Trigger Big Medical Kickback Settlement

On Behalf of | Mar 30, 2020 | Health Care Fraud

The U.S. Justice Department announced a $20.25 million agreement with Sanford, a Midwest-based health care organization. The deal resolved allegations that Sanford knew it was participating in a kickback scheme with one of its top surgeons, according to allegations.

Two whistleblowers alleged the surgeon performed unnecessary surgery, implanting medical devices in which he had a financial interest with Sanford’s knowledge. The Justice Department warns that kickback schemes like the one alleged, “warp the medical decision-making process.”

“Qui tam” suits encourage colleagues to speak up

A neurosurgeon and an orthopedic surgeon filed the complaint under the False Claims Act, which allows whistleblowers to sue “qui tam,” or on the government’s behalf. If the suit is successful, whether the government joins in or not, the whistleblowers get a portion of the settlement.

In this case, $10.25 million will go to repaying the government for Medicare, Medicaid, and other payments made for unnecessary surgeries and devices. Another $3.4 million will go to the whistleblowers who originated the suit.

U.S. kickback law watches tax spending on health care

According to the settlement, the accused doctor and Sanford violated federal anti-kickback laws.

The statutes forbid payments (kickbacks) for referring patients, prescribing medication, ordering surgeries and the like when a federal program is reimbursing. The premise is that patient health, not tax dollars, is the proper goal of medicine.

The settlement alleges the surgeon performed unnecessary spinal surgeries and Sanford continued to bill federal agencies for the work and devices, including those the doctor had invented and provided to the hospital through his doctor-owned distributor. It says the whistleblowers and the Argus Leader, the largest newspaper in Sanford’s home city, gave Sanford ample notice that the scheme was illegal.

Doctor and health care provider deny wrongdoing

After the public revelation of the settlement, according to Becker’s Hospital Review, the health care provider cut ties with the doctor, writing to employees, “As you know, Sanford took these allegations seriously […] and we believe collaborating with the federal government on this settlement was in the best interest of our patients.”

The doctor provided the local paper with a statement, saying in part, “I want to make my position clear. I did not perform any unnecessary surgeries [nor profit] from using medical devices I invented. […] I am disappointed that after originally accurately identifying the […] accusations as ‘bogus,’ Sanford made business decisions that led it to fire me and pay my accusers over $20 million, but, sadly, for some, business is just business.”