Miami-based nursing home chain pays $17 million to settle former CFO’s whistleblower case

by Ben Vernia | June 16th, 2015

On June 16, the Department of Justice announced that it had reached a settlement with Florida-based Hebrew Homes Health Network, and its CEO, in a suit originally brought by the company’s former CFO as a whistleblower. According to DOJ’s press release:

Hebrew Homes Health Network Inc., its operating subsidiaries and affiliates, and William Zubkoff, the former president and executive director of Hebrew Homes Health Network Inc. (collectively Hebrew Homes), have agreed to pay $17 million to resolve allegations that Hebrew Homes violated the False Claims Act by improperly paying doctors for referrals of Medicare patients requiring skilled nursing care, the Department of Justice announced today.  Hebrew Homes provided skilled nursing services at seven rehabilitation and skilled nursing facilities in Miami-Dade County, Florida.  This is the largest settlement involving alleged violations of the Anti-Kickback Statute by skilled nursing facilities in the United States.

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From 2006 through 2013, Hebrew Homes allegedly operated a sophisticated kickback scheme in which they hired numerous physicians ostensibly as medical directors pursuant to contracts that specified numerous job duties and hourly requirements.  The various facilities had several such medical directors under contract at any given time, paying each several thousand dollars monthly.  The United States alleged that in reality these were ghost positions, and that most of the medical directors were required to perform few, if any, of their contracted job duties.  Instead, they were allegedly paid for their patient referrals to the Hebrew Homes facilities, which increased exponentially once the medical directors were put on the payroll.

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The Anti-Kickback Statute is intended to ensure that a physician’s medical judgment is not compromised by improper financial incentives.  The Anti-Kickback Statute prohibits offering, paying, soliciting or receiving remuneration to induce referrals of items or services covered by federal health care programs, including Medicare.

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As part of the settlement, Mr. Zubkoff has agreed to resign as Hebrew Homes’ Executive Director and to no longer be an employee of the company.  Also, as part of the settlement announced today, Hebrew Homes has entered into a five-year corporate integrity agreement with HHS-OIG, and has agreed to change its policies on hiring and maintaining medical directors.

The government announced that it will pay the former CFO $4.25 million of the settlement (a 25% relator’s share – the maximum called for under the False Claims Act for cases in which the government intervenes).

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