A cancer treatment firm recently agreed to pay a $26 million qui tam Medicare settlement in order to resolve allegations that it violated the False Claims Act by paying off doctors who made referrals to them.

The company, 21st Century Oncology LLC, has filed for bankruptcy. As part of the bankruptcy court proceedings, the company has agreed to pay the $26 million qui tam Medicare settlement after a whistleblower uncovered an alleged Medicare fraud scheme.

The whistleblower, a former executive, claimed that 21st Century Oncology paid physicians to refer patients to their facilities. Former interim vice president of financial planning Matthew M. discovered the illegal compensation structure. He asked about the arrangement but was then fired, he claims.

Law360 reports that the compensation scheme violated the Stark Law, a section of the Social Security Act. The Stark Law prohibits doctors from referring patients to other facilities if they have a financial relationship with that facility.

The unsealed qui tam Medicare complaint claims that 21st Century Oncology, which operates 100 centers in the United States, significantly overpaid some doctors if they referred their patients to the oncology centers. Because of this, the government says, false Medicare and Medicaid claims were made. The qui tam complaint was unsealed only after both parties signed a proposed qui tam Medicare settlement agreement.

Some estimates allege that in the first three quarters of 2015 alone, doctors received $8.7 million for referring patients to the 21st Century Oncology centers.

According to Law360, the qui tam Medicare complaint said, “By knowingly submitting claims for reimbursement based on referrals generated by physicians who received compensation based on these terms, 21st Century violated the FCA. This conduct resulted in millions of dollars of damages to the taxpayers.”

This past May, 21st Century Oncology filed for Chapter 11 bankruptcy for the purpose of trying to reduce its $1.1 billion debt. This qui tam Medicare settlement agreement was entered in bankruptcy court.

This is not the first qui tam Medicare settlement that 21st Century has had to pay in recent years. In 2015, they agreed to pay $20 million and in 2016, they agreed to pay $35 million–both for separate False Claims Act claims.

What is a Qui Tam Lawsuit?

Under the False Claims Act, an individual may file a lawsuit on behalf of the federal government if that individual has information regarding fraud against the government. That lawsuit is called a qui tam lawsuit.

The whistleblower that initiates a qui tam lawsuit is protected against retaliation from their employer. The whistleblower may not be fired as a result of the action, and if he or she is fired, he or she can sue to get their job back plus past and lost wages.

For filing the 21st Century qui tam lawsuit and his role in it, Matthew stands to receive upwards of $2 million in addition to over $50,000 in expenses and attorney’s fees.

The Qui Tam Medicare Settlement Lawsuit is U.S. et al. v. 21st Century Oncology LLC, Case No. 2:16-cv-00099 in the U.S. District Court for the Middle District of Florida.