A $3.2 million medical whistleblower settlement was recently announced to resolve claims that a dialysis provider was accepting illegal kickbacks.

On Jan. 29, the Tennessee State Attorney General’s Office announced that WellBound – a dialysis provider in Memphis owned by Satellite Healthcare – had agreed to pay $3.246 million in a settlement.

The dialysis provider allegedly filed fraudulent claims with Medicare, Tricare, and Tenncare between 2016 and 2018 in connection with illegal kickbacks. WellBound would reportedly pay compensation to physicians when they referred patients to their clinic. This sort of kickback scheme is prohibited under United States law.

“When physicians receive financial incentives in exchange for patient referrals, it distorts medical decision-making and freezes out competition,” said Derrick L. Jackson, special agent at the HHS Office of Inspector General, according to Healio. “This settlement sends a strong message that Medicare and Medicaid patients are not for sale.”

The medical whistleblower settlement was reached to resolve allegations first raised under the False Claims Act – a federal law which allows parties to sue on behalf of the United States government and receive a portion of the recovery.

Medical companies are frequently on the receiving end of these lawsuits for illegal billing practices and other behaviors. These issues are often the subject of False Claims Act lawsuits because they defraud government run programs such as Medicare.

“Protecting the health and safety of Medicare patients is one of our primary concerns,” said D. Michael Dunavant, United States Attorney General for the Western District of Tennessee, while discussing the recent medical whistleblower settlement. “When medical providers break the law by defrauding the government by providing illegal inducements in violation of the anti-kickback statute, we will use our resources to combat this fraud and hold them accountable.”

The False Claims Act was enacted over 100 years ago in 1863 during the Civil War. Congress put the law into place due to concerns that suppliers for the Union Army were defrauding the government. Since then, the False Claim Act has been amended to increase damages and penalties.

The “qui tam” (an abbreviation of a Latin phrase meaning “[he] who sues in this matter for the king as well as for himself”) provisions in the False Claims Act are what empower parties to file lawsuits on behalf of the government.

When a “whistleblower”, or relator, files a qui tam lawsuit, the complaint is sealed for 60 days to provide time for the government to investigate the issue. Then, the government can decide whether or not to intervene in the lawsuit.

If the government does not intervene, the relator can decide whether or not to proceed on their own. If the government does intervene and a settlement is successfully reached, the relator may be able to receive between 15 and 25 percent of the recovered amount. If the government does not intervene and a settlement is reached, the relator’s share is increased to 25 to 30 percent of the recovery.