Healthcare system and cardiologist settle whistleblower lawsuit for $37.5 million

Last year, the United States spent more than $700 billion to provide Medicare benefits for people age 65 and above. It is important for Michigan physicians and health system management to understand that an investment of that size is going to be protected by federal law enforcement agencies.

One of their most powerful protection tools is the Anti-Kickback Statute, which prohibits paying, offering, soliciting or receiving compensation to induce patient referrals for services covered by Medicare, Medicaid or Tricare.

Entitled to share the settlement

Another powerful tool: whistleblower lawsuits filed by private citizens on behalf of the government involving allegations of fraud against federal programs such as Medicare. The plaintiff can be entitled to a portion of a settlement resolving the matter.

The Department of Justice recently settled a whistleblower lawsuit for what “appears to be the largest settlement in a case brought against a hospital for kickbacks paid to a single physician,” an attorney representing the plaintiff said.

Sizable settlement

According to a MedPage Today report, Prime Healthcare, its CEO and a cardiologist employed by the California-based health system will pay $37.5 million to settle a whistleblower lawsuit that alleged kickbacks and fraudulent medical billing.

Prime Healthcare CEO and founder Prem Reddy, MD, and the system he headed allegedly arranged in 2015 to buy from cardiologist Siva Arunasalam, MD, his private practice and surgical center for three times its market value. In return, Prime Healthcare would receive patient referrals.

Whistleblower motivation

The allegations were made in a 2018 whistleblower lawsuit filed by Martin Mansukhani, a former regional financial officer for Prime. Mansukhani is to receive more than 25 percent (or $9.375 million) of the settlement.

Prime is to pay nearly $34 million of the settlement. Reddy will pay $1.8 million and cardiologist Siva Arunasalam, MD, will contribute $2 million.

In a statement, Prime noted the settlement includes “a complete release of any liability and no finding of fault.”

More financial details

According to the lawsuit, the $10 million purchase of the private practice and surgical facility was to eliminate competition for a Prime hospital in Victorville, California.

In addition to the purchase price, Prime hired Arunasalam at an annual $1.2 million salary.

The interventional cardiologist allegedly used his billing number to charge Medicare for services provided by a doctor “whose billing privileges had been revoked,” MedPage Today reported.