Health Quest System Inc. and several of its subsidiaries have agreed to pay a $14.7 million whistleblower settlement, after allegedly falsely billing government agencies for medical services and goods that did not match the exorbitant billing amount.

Two of these subsidiaries were Health Quest and Putnam Health Center (PHC), which have also agreed to pay the whistleblower settlement for allegedly submitting false claims to the federal government.

By paying the whistleblower settlement, Health Quest will resolve the allegations of wrongdoing under the False Claims Act (FCA) by allegedly wrongfully billing the federal government.

Health Quest is a New York based healthcare company that consists of hospitals and providers that deliver surgical, medical, and home healthcare services.

Overview of Whistleblower Settlement

According to the whistleblower lawsuit, Health Quest had allegedly submitted false claims for evaluation and management services from April 1, 2009, through June 23, 2015, which did not match the level of care that was provided. Reportedly, the services were billed two levels higher than reflected on medical records.

In addition, the whistleblower lawsuit states that Health Quest had submitted false claims for home health services but had reportedly lacked the medical records that indicated the services were provided from April 1, 2011 through August 2014.

The whistleblower lawsuit also notes that between March 1, 2014, through Dec. 31, 2014, Health Quest and subsidiary PHC had allegedly made false claims for inpatient and outpatient services that were referred to PHC by two orthopedic physicians.

These actions are allegedly violations of the Physician Self Referral Law, with the physicians also having a financial kickback arrangement with PHC in which administrative services were provided in exchange for financial compensation.

The Physician Self Referral Law prohibits hospitals from billing Medicare for certain health care services, which were referred through physicians that may have illegal kickback arrangements with the said healthcare facilities.

The United States federal government alleges that the compensation provided to these claims had exceeded the fair market value, which is also in violation of the Physician Self Referral Law. These claims and kickback arrangements in the PHC physicians allegedly violate the Anti Kickback Statute.

The whistleblower settlement resolves three qui tam lawsuits, filed by former Health Quest employees including John B. and Carolyn C. who will be collectively rewarded $56,266, and Gregory F., who will receive $875,546.

Under the False Claims Act, a whistleblower is any individual who reports fraud against the federal government and can receive up to 30 percent of any settlement recovered.

In addition, Health Quest will pay an additional $895,427 to the State of New York on top of the whistleblower settlement paid to the federal government. Furthermore, Health Quest also agreed to a Corporate Integrity Agreement (CIA) with HHS-OIG to ensure that the healthcare company complies with federal standards in the future.

“This resolution is a testament to our deep commitment to protecting the integrity of federally-funded healthcare programs. [W]e are determined to hold accountable healthcare providers that knowingly claim taxpayer funds to which they are not entitled,” said Acting Assistant Attorney General for the Justice Department’s Civil Division, in a press release.

These Whistleblower Settlement Lawsuits are captioned: United States, et al. ex rel. Folta v. Health Quest Systems, Inc., et al., Case No. 1:15-cv-396 (N.D.N.Y.); United States, et al. ex rel. Cleary v. Health Quest Systems, Inc., et al., Case No. 16-cv-76 (N.D.N.Y.); and United States, et al. ex rel. Betaudier and Carroll v. Health Quest Medical, Practice, P.C., et al., Case No. 1:16-cv-1344 (N.D.N.Y.).