Consumer Fraud

Whistleblower Helps U.S. Recover $8.1 Million from California Hospital Group

Pills Stethascope on Money 435x289 Whistleblower Helps U.S. Recover $8.1 Million from California Hospital GroupA whistleblower lawsuit accusing a Los Angeles-based hospital group of engaging in unlawful financial arrangements has led to an $8.1 million settlement with the U.S. Government.

Avanti Hospitals LLC and six of its owners agreed to pay the U.S. $8.1 million to settle whistleblower allegations that they violated the Anti-Kickback Statute, the Physician Self-Referral Law (also known as the Stark Law), and the False Claims Act.

The lawsuit, filed by Dr. Joshua Luke, the former CEO of Gardena Hospital, alleged that Avanti, Gardena Hospital, and at least two other Avanti affiliates bribed a high-referring physician with payments that exceeded the fair market value for their supposed purpose.

These kickback payments incentivized the physician to refer patients to Gardena hospital, the whistleblower lawsuit alleged.

The Anti-Kickback Statute prohibits offering, paying, soliciting, or receiving payment or other awards to gain referrals of items or services covered by Medicare, Medicaid and other federally funded programs.

The Stark Law prohibits a hospital from billing Medicare for certain services referred by physicians with whom the hospital has an improper financial arrangement. Congress passed the Anti-Kickback Statute and the Stark Law to ensure that a physician’s medical decisions aren’t distorted by improper financial incentives but based on the patient’s best interests.

“Illegal kickbacks paid to doctors for referrals burden our health care system, drive up insurance costs for everyone, and corrupt the doctor-patient relationship,” said U.S. Attorney Nick Hanna for the Central District of California. “Patients are not commodities who can be sold to the highest bidder, especially when the bills are ultimately being paid by American taxpayers.”

According to the U.S. Justice Department, the Avanti settlement resolves Dr. Luke’s whistleblower lawsuit partially. Other allegations remain under seal while federal authorities investigate them.

Dr. Luke filed the lawsuit under the whistleblower provisions of the False Claims Act, which allow private parties to sue on behalf of the United States. Whistleblowers whose False Claims Act lawsuits lead to a recovery receive a percentage of the settlement or judgment as an award. According to the DOJ, Dr. Luke will receive an award of about $1.6 million.