The Department of Justice recently announced an $11.5 million settlement with a Texas-based radiation therapy company, SightLine Health LLC, to resolve allegations that the company was defrauding Medicare and other federal healthcare programs. The case began when a whistleblower filed a lawsuit on behalf of the federal government under the False Claims Act, accusing SightLine and eight individual doctors of submitting fraudulent invoices to Medicare and violating the federal Anti-Kickback law.
The Anti-Kickback Law and the False Claims Act
The Anti-Kickback Statute makes it a felony for healthcare providers to pay doctors in exchange for patient referrals. The law was passed in 1972 to punish doctors and providers who exchanged bribes for referring patients for treatments that were medically unnecessary.
The False Claims Act prohibits individuals and organizations from submitting claims to the federal government that are fraudulent in nature. Common examples of false claims are invoices for goods or services that were never provided or billing claims based on misrepresentations.
Combined, these laws prohibit healthcare providers from submitting invoices to Medicare and other federal programs for treatments provided to patients who were referred by doctors in exchange for kickbacks.
In this case, for example, SightLine was accused of violating the False Claims Act by submitting claims to the government for radiation therapy that SightLine provided to patients it acquired through kickbacks. As part of its scheme, SightLine effectively paid the defendant doctors to refer cancer patients to them for radiation treatment, which SightLine would then bill Medicare for.
The Kickback Scheme
The kickbacks in SightLine’s scheme were not typical. Usually, kickbacks are direct payments between healthcare providers and doctors, a quid pro quo involving money for patient referrals.
In this case, the kickbacks were paid through a more complicated investment scheme. SightLine solicited the defendant doctors to invest their money in SightLine’s radiation therapy facilities. This created a conflict of interest in that the doctors were both investors in SightLine and also SightLine’s primary source of patient referrals.
As investors, the doctors were financially rewarded for referring patients to SightLine. Since the Anti-Kickback Statute prohibits indirect payments too, the returns the doctors received from that investment qualified as illegal kickbacks.
In fact, SightLine’s investment scheme also violated another federal law, the Stark Law, which explicitly prohibits doctors from referring patients to organizations with which the doctors have a “financial relationship.”
Both the Anti-Kickback Statute and the Stark Law function to protect patients by removing incentives for doctors to refer patients for treatments that are medically unnecessary. And when patient referrals are motivated by kickbacks and not the patient’s best interests, the doctors and healthcare providers involved are engaging in a form of fraud.
Compliance with the Anti-Kickback and Stark Law is required for those submitting invoices to the Medicare and other healthcare programs. When SightLine’s illegal patient referrals became the basis for its reimbursement claims to Medicare and other federal programs, the company violated the False Claims Act.
How a Whistleblower Exposed SightLine’s Scheme
Though SightLine’s fraud was exposed in this case, fraud against the government is difficult to police. The federal government is simply too big to root out fraud on its own, especially in expansive areas like healthcare. Luckily, a whistleblower discovered SightLine’s fraud and brought it to the government’s attention.
The $11-million settlement in this case was made possible because a company, IIRT, filed a whistleblower lawsuit under the False Claims Act’s “qui tam” provision, which allows civilians to file lawsuits on behalf of the federal government. The lawsuit was filed under seal to protect IIRT from retaliation and so the government could investigate the claims without tipping off SightLine.
It’s important to take note of the procedural hurdle that IIRT and other whistleblowers have to overcome to succeed in their lawsuits. Whistleblower plaintiffs have to comply with Rule 9(b), which requires that plaintiffs alleging fraud “state with particularity the circumstances constituting fraud.” Here, IIRT alleged that, even though they didn’t have access to some of the key evidence needed to prove the allegations, they had some first-hand knowledge of the “factual basis” for the complaint. This first-hand knowledge is absolutely necessary to succeed on a whistleblower claim.
Here, there were many red flags that could have tipped off IIRT to the alleged fraud. For one, the Texas market for radiation therapy is mostly consolidated in hospitals—referrals to outside radiation therapy providers are rare. It’s likely IIRT noticed that SightLine’s clinics, and the doctors referring patients to those clinics, were experiencing an unrealistically high volume of patients.
As with any whistleblower lawsuit, the government launched its own investigation into the allegations after IIRT filed its complaint. The government then “intervened” in the lawsuit and took over the case.
When the government intervenes and wins a recovery, the whistleblower is rewarded a percentage of that recovery, usually between 15 to 25%. But even when the government does not intervene, a whistleblower can elect to pursue the case by themselves. If they win a recovery on behalf of the government, they are entitled to a larger share of the recovery than if the government intervened.
Contact an experienced whistleblower attorney for advice if you have firsthand knowledge of fraud against the government.
Like most whistleblower cases, this case started when the whistleblower noticed something suspicious. In fact, many of these lawsuits begin because a whistleblower notices an abnormal trend in the market or that their employer is engaged in unethical behavior.
In one of our firm’s recent whistleblower cases, our client discovered that her competitors were illegally evading customs duties when she noticed they were selling their products below the fair market value. Our whistleblower lawsuit eliminated the unfair competition she was facing, recouped taxpayer losses, and resulted in a significant whistleblower reward for our client.
If you believe you have knowledge of fraud being committed against the federal government, you may have a whistleblower claim. If it’s valid, you could qualify for a sizable reward.
Time is of the essence in whistleblower cases, as you can lose your claim if another person files a lawsuit first. Call our firm today for a free consultation with one of our experienced whistleblower attorneys.