The U.S. Department of Justice announced that HealthNet Inc. and Indiana University have opted to settle a litigation claiming the defendants submitted false Medicare claims and violated kickback laws.

Without declaring charge and accountability, the defendants have agreed to pay $18 million dollars to settle the alleged false Medicare claims. HealthNet and IU will each pay $3.9 million to the state of Indiana and roughly $5.1 million each to the federal government.

According to the Justice Department, the lawsuit settles the suit filed by Dr. Judith R., who is the medical director of obstetrics and gynecology at IU Health and a former women’s services director at HealthNet.

According to Judith, the false Medicare claims suit accused the defendants of attempting to raise their profits and proceeds by submitting inaccurate Medicare claims that falsely stated certain services were done by medical practitioners, or physicians, when they were in fact performed by certified nurse midwives for a lesser service cost.

Moreover, although the DOJ contends that there is no evidence that shows that damage and physical harm resulted from the stated allegations, Dr. Judith R. does assert that some babies and mothers have died as a result. Mothers underwent emergency C-sections, and some babies suffered permanent neurological damage, she says.

After the false Medicare claims lawsuit was filed, moreover, statements from the DOJ report that IU Health financially supported the activity with an interest-free line of credit greater than $10 million between May 2013 and August 2016.

Under the alleged business arrangement, HealthNet would not reimburse IU Health for the loan’s outstanding balance. And instead, “HealthNet would allegedly refer its obstetrics and gynecology patients to IU Health’s Methodist Hospital, and IU Health would then bill Medicaid for patient hospital stays,” according to Law360.

According to the DOJ, the arrangement set between HealthNet and IU Health violated both the False Claims Act and the federal Anti-Kickback Statute.

According to a pamphlet put out by U.S. Department of Health and Human Services, the Anti-Kickback Statute is “a criminal law that prohibits the knowing and willful payment of ‘remuneration’ to induce or reward patient referrals or the generation of business involving any item or service by the Federal health care programs (e.g., drugs, supplies, or health care services for Medicare or Medicaid patients).”

Additionally, “it is illegal to submit claims for payment to Medicare of Medicaid that you know or should know are false or fraudulent.”

The DOJ filed a motion to settle claims addressing the violations of the Anti-Kickback Statute. It will not, however, intervene to settle claims suggesting that the IU Health had certified nurse midwives to perform high-risk pregnancies instead of medical practitioners.

IU Health contends that the settlement reflects IU Health’s desire to prevent extensive, drawn out and expensive litigation.

They added that their arrangement with HealthNet, “actually resulted in substantial financial losses for it, which IU Health considers to be part of its mission as a nonprofit,” according to Law360.

HealthNet similarly “vehemently disputes” the false Medicare claims and says it opted to settle the lawsuit to “avoid the significant time, expense and administrative burdens associated with litigation.”