Pennsylvania-based operator of long-term care facilities pays over $13 million to settle whistleblower’s case

by Ben Vernia | August 16th, 2018

On August 15, the Department of Justice announced that Pennsylvania-based Post-Acute Medical, LLC, had agreed to pay $13,168,000 to settle a whistleblower’s allegations that the company violated the Antikickback Statute and the Stark Law. According to DOJ’s press release:

Post Acute Medical, LLC, a Pennsylvania-based operator of long‑term care and rehabilitation hospitals across the country, and certain affiliated entities through which the company operates its facilities (collectively, “PAM”), have agreed to pay the United States, Texas, and Louisiana a total of $13,168,000 to resolve claims that they violated the False Claims Act, and the Texas and Louisiana false claims statutes, by knowingly submitting claims to the Medicare and Medicaid programs that resulted from violations of the Anti‑Kickback Statute and the Physician Self‑Referral Law, the Justice Department announced today.

The Anti-Kickback Statute, in relevant part, prohibits offering or paying anything of value to encourage the referral, or to encourage recommending or arranging for the referral, of items or services covered by Medicare, Medicaid, and other federally funded programs.  The Physician Self‑Referral Law, commonly known as the Stark Law, prohibits a hospital from billing Medicare for certain services referred by physicians with whom the hospital has an improper financial relationship.  Both the Anti-Kickback Statute and the Stark Law are intended to ensure that medical decision-making is not compromised by improper financial incentives and is instead based on the best interests of the patient.

Since it was founded in 2006, PAM entered into numerous physician-services contracts on behalf of its hospitals.  Although the purpose of these contracts was ostensibly to retain physicians as medical directors or in other administrative or medical roles, the United States alleged that in reality the company’s payments under these contracts were intended to induce the physicians to refer patients to PAM’s facilities.  The company allegedly violated the AKS further by entering into what it called “reciprocal referral relationships” with unaffiliated healthcare providers such as home health companies.  In the course of those arrangements, PAM allegedly referred patients to those other providers with the understanding that those providers would refer other patients to PAM’s facilities.

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PAM’s conduct allegedly resulted in false claims to Medicare as well as certain Medicaid programs.  The latter are jointly funded by both the federal and state governments.  Under the settlement, PAM will pay $13,031,502 to the United States, $114,016 to Texas, and $22,482 to Louisiana.

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The company has also agreed to a five-year corporate integrity agreement with HHS’s Office of Inspector General.

DOJ announced that the whistleblower, whose relationship to the defendant it did not disclose, will receive $2,345,670 of the federal government’s portion of the settlement (an 18% relator’s share).

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