A New York hospital operator allegedly submitted numerous false claims to Medicare and faced a serious qui tam lawsuit after being reported by whistleblowers.

Defendant MediSys Health Network Inc., owner and operator of Jamaica Hospital Medical Center and Flushing Hospital and Medical Center, agreed to pay $4 million to settle allegations of improper billing practices, according to which false claims to Medicare were allegedly submitted.

According to the Justice Department, MediSys Health Network Inc. allegedly engaged in improper financial arrangements with referring physicians. The settlement will reportedly resolve numerous allegations that the defendant billed Medicare for services rendered to patients referred by certain physicians that the healthcare company allegedly had financial arrangements with.

MediSys reportedly compensated physicians by paying the leases on their office spaces, which violates the Stark law. Under the Stark law, restrictions and requirements are imposed on relationships between healthcare facilities and doctors who refer patients to them.

This qui tam lawsuit was filed by whistleblower Dr. Satish D., who filed the claim on behalf of the United States government and will be eligible for a portion of the settlement. Under the current qui tam settlement, Dr. Deshpande will receive $600,000 from the $4 million settlement for his role as a whistleblower.

Overview of Medicare Fraud

To be considered a whistleblower, or “relator,” the person who files a whistleblower lawsuit must be the primary source of information for the fraud report and cannot rely on secondary information.

Under the country’s False Claims Act, whistleblowers may be eligible to receive 15% to 30% of whatever settlement is produced from the qui tam lawsuit. Whistleblowers are considered very important in fraud prevention and in recovering taxpayer money.

“This recovery should help to deter other health care providers from entering into improper financial relationships with physicians that can taint the physicians’ medical judgment, to the detriment of patients and taxpayers,” said Acting Assistant Attorney General of the Justice Department’s Civil Division.

Healthcare providers that enter improper financial arrangements with referring physicians may increase the risk of false claims to Medicare. These improper relationships may lead to compromising the referral process, encouraging overuse of utilizing services, and submitting false claims to Medicare that ultimately affects the federal government and taxpayers.

Healthcare fraud is one of the most significant forms of fraud in the United States, primarily affecting Medicare, Medicaid, and other government health programs. This primarily occurs when healthcare facilities or physicians submit false claims to Medicare or other government programs for compensation for services or products.

These false claims to Medicare can include: overcharging for goods or services, arranging kickback systems between hospitals and referring physicians, and billing for services not needed or received by the patients. Furthermore when healthcare facilities that provide these alleged bribes to physicians for patient referrals, because the best interest of the patients may not be served.

According to officials from the U.S. Department of Health and Human Services Office of Inspector General stated investigators “will continue to investigate such entities who fraudulently bill government health programs.”

This Qui Tam Lawsuit is Case No. 13-cv-4030 in the U.S. District Court for the Eastern District of New York.