False Claims Act: Mergers and Acquisitions as Kickbacks in Healthcare

April 28, 2022

FThe Anti-Kickback Statute, 42 U.S.C. § 1320a-7b(b) (the “AKS”), prohibits the payment of kickbacks in any form as an inducement for the referral or provision of healthcare services that are reimbursed by federal health care programs, but since there are exceptions and exceptions to the exceptions it is always best to consult with a whistleblower law firm before making a decision about how to proceed before filing a False Claims Act Lawsuit.  Plus, you must use a whistleblower law firm to file under the False Claims Act, so it only makes sense to consult a qui tam law firm early and often.

What is a kickback in healthcare? Kickbacks–essentially bribes designed to influence healthcare decisions—can take many forms. In recent years, the Office of the Inspector General has issued special fraud alerts and opinions regarding kickbacks disguised as free meals, lodging, and entertainment to healthcare providers,[1] speaker programs with lucrative “fees” to providers,[2] “white coat marketing” by healthcare professionals,[3] reduced rent charged for office spaces,[4] and more.

In 2021, several mergers and acquisitions deals in the healthcare space faced scrutiny from the Department of Justice as implicating the AKS. These violations generally involved acquisitions at prices above the fair market value (“FMV”) of the acquired practice, where the excess payment represents the value of patient referrals. Notably, all of these cases were brought by courageous whistleblowers or “Relators” under the qui tam provision of the False Claims Act (“FCA”). If successful, through the use of False Claims Act counsel, whistleblowers can receive up to 30% of the government’s recovery in an FCA action. The cases are discussed below:

  • • Prime Healthcare Services and affiliated entities, which operate multiple hospitals throughout California, paid $37 million to resolve FCA allegations that they violated the AKS by buying a physician practice at a price above FMV, in order to induce that physician to refer his patients to Prime Healthcare.[5] According to the complaint, Defendants paid $8.7 million above the FMV, and in exchange, the physician closed down his practice and transferred all of his patients to Defendants. This case was brought by a qui tam whistleblower or “relator,” who received nearly $10 million as his share of the federal government’s recovery.
  • • Bayada Home Health Care and affiliated entities paid $17 million to resolve allegations that they purchased two home-health agencies in Arizona in exchange for the seller agreeing to refer retirement community residents to Bayada for home health services.[6] The Relator who brought this case received more than $3 million as his whistleblower award.
  • • Flower Mound Hospital Partners and affiliated entities, which operate a hospital in Texas, agreed to pay $18 million to resolve allegations that they sold ownership shares to certain physicians based on the volume of referrals to the hospital those physicians could provide.[7] The Relator in this case received approximately $3 million as his relator share.

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    Like the relators who blew the whistle in these cases, if you have insider information that a purchase of a physician practice, clinic, or other healthcare facility involved payments in exchange for referrals or a purchase price far beyond fair market value, you should consult the experienced whistleblower lawyers at Brown, LLC to determine whether you have a case. To schedule a free and confidential consultation, contact Brown, LLC at 877-561-0000 or











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