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California Nursing Facilities to Pay $45.6 Million in Anti-kickback Settlement.

The United States Department of Justice, and Paksn Inc., a management company for Skilled Nursing Facilities (SNFs), entered into a settlement agreement to resolve Paksn’s violations of the Anti-Kickback Statue (ASK) which also violates the False Claims Act. The fraud was brought to the attention of the US DOJ after Paksn’s former Vice President of Operations and COO, filed a qui tam complaint revealing the fraud taking place. The relator is eligible to receive a False Claims Act whistleblower award up to $11,250,000 or 25% of the settlement payout.

Kickbacks are a form of illegal financial compensation generally given to physicians as a means by which other medical service providers use an inducement to acquire more patients—which is illegal if the patients are covered by taxpayer funded insurance. In Paksn’s case, the business offered physicians a commission proportionate to the number of patients they referred to Paksn’s SNFs. This at minimum has the appearance of the conflict of interest and may be an actual conflict, insofar as the physicians issuing referrals in this case may have disregarded the best interests of their patients and instead prioritized their own financial gain.

For twelve years, Paksn allegedly blatantly disregarded the AKS, regularly hiring and firing physicians as pseudo administrators, based solely on their ability to refer a high volume of clients to the SNFs. “On one occasion, a Paksn employee told [Paksn CEO] that two physicians were being hired because ‘they are promising at least 10 patients for $2000 per month,’ to which [Paksn CEO] responded, ‘good job. Make sure they give you patients everyday. [W]e can also expand to other buildings with them, if possible.’”

In this case, and all other cases of fraud, whistleblowers are critical to the protection of public interest and as shown here if filed properly under the False Claims Act could strand to receive billions in whistleblower awards