Seven major Stark Law indictments contributed to a record-breaking year for whistleblower qui tam lawsuits in 2024, according to a Jan. 15 Justice Department report.
A total of 979 qui tam lawsuits were filed, with False Claims Act settlements and judgments reaching $2.92 billion for the federal government's Sept. 30 fiscal year end. This figure represents an increase from $2.79 billion in the previous year and is the highest since 2021, when settlements and judgments totaled $5.69 billion.
"Kickbacks paid or received by healthcare providers undermine the integrity of federal health care programs by tainting medical decision-making, increasing healthcare costs, and adversely affecting competition," the news release said. "The Stark law seeks to safeguard the integrity of the Medicare program by prohibiting billing for certain services when the referring physician and the entity submitting the claim have a financial relationship that does not satisfy one of the statute’s exceptions."
Here are the seven Stark law cases spotlighted by the Federal Trade Commission:
1. Erlanger Health System (July 2024)
The Justice Department’s complaint against Erlanger Health System accused it of employing and receiving referrals from physicians whose compensation arrangements violated Stark law exceptions. This case involved Murphy (N.C.) Medical Center and Chattanooga-Hamilton County (Tenn.) Hospital Authority.
2. DaVita Inc. (July 2024)
DaVita paid $34.5 million to settle allegations of kickbacks to competitors, nephrologists and vascular access physicians to induce referrals. The company reportedly paid a competitor to direct Medicare patients' prescriptions to DaVita Rx, its former central pharmacy, while acquiring European dialysis clinics and extending agreements to purchase dialysis products from the competitor.
3. Innovasis (May 2024)
Innovasis and two senior executives agreed to pay $12 million to resolve allegations of kickbacks to spine surgeons. These kickbacks reportedly included consulting fees, licensing fees, performance shares, luxury travel and extravagant dinners to encourage the use of Innovasis spinal implants and devices in procedures for Medicare beneficiaries.
4. Cardiac Imaging (February 2024)
A Justice Department complaint alleged that Rick Nassenstein, former president and CFO of Cardiac Imaging, orchestrated a scheme to pay cardiologists excessive fees to supervise PET scans. These fees, often paid even when cardiologists were off-site, allegedly exceeded fair market value.
5. RDx Bioscience (January 2024)
RDx Bioscience and its owner-CEO, Eric Leykin, paid $10.3 million to settle claims of providing kickbacks through commission-based payments to independent marketers, incentivizing referrals for RDx laboratory tests. The company also allegedly disguised payments to physicians as investment returns to induce test orders.
6. Community Health Network (December 2023)
Indianapolis-based Community Health Systems agreed to pay $345 million to resolve allegations of Stark law violations. The suit claimed the health system provided appraisers with false information, doubled physicians' salaries based on private practice earnings and ignored warnings about discrepancies between high physician compensation and productivity. Senior management allegedly recruited physicians primarily to secure downstream referrals.
7. Prema Thekkek and Paksn (November 2023)
Prema Thekkek, her management company, Paksn, and six skilled nursing facilities resolved allegations by paying $45.6 million. The case alleged they offered kickbacks to physicians in the form of medical directorships to secure patient referrals.