The most recent False Claims Act case to be settled involves allegations against Avanti Hospitals LLC. The owners and that organization have agreed to pay over $8 million to settle allegations of illegal payments made in a referral scheme.

The Los Angeles-based Avanti Hospitals was accused of violating the False Claims Act by submitting fraudulent claims to Medicaid and Medicare. False claims to government programs effectively defraud U.S. taxpayers whose funds support the programs.

The payments at issue were allegedly made for medical services referred by a physician who received inappropriate kickbacks from Avanti affiliates. The government alleged that the referring physician was in violation of the physician’s self-referral law and the anti-kickback statute.

The physician self-referral law is also known as the Stark Law. It prohibits a hospital from billing Medicare for services that were referred by doctors with whom the health care institution has an inappropriate compensation arrangement.

The anti-kickback statute prohibits paying, soliciting, receiving or offering payment to induce referrals of items or services that are covered by Medicaid, Medicare or other federally funded programs.

This False Claims Act whistleblower settlement resolved the allegations that several Avanti affiliates regularly paid out compensation to a physician that they employed as a medical director. According to those allegations, the physician was paid more than fair market value for his services and this was an attempt to incentivize that doctor to refer patients to Gardena Hospital.

The former CEO of Gardena Hospital, Dr. Joshua Luke, was the whistleblower in this case. The FCA enables private individuals who have insider knowledge about fraud and illegal activity to sue on behalf of the government when false claims have been made against federally funded sources.

The federal FCA covers claims that are submitted to Medicaid or Medicare. Allegations of FCA violations are a serious matter. Health care providers or employees could be subjected to monetary penalties between $5,500 and $11,000 for every false claim that was ultimately submitted.

According to the Office of Inspector General at the Department of Health and Human Services, states are also eligible to bring False Claims Acts that can qualify for incentives under the Social Security Act.

In many cases involving fraud or payments made out of the Medicare or Medicaid program, a whistleblower or a person with inside information about these specific schemes will come forward and report their concerns. The government relies on reports from whistleblowers to investigate instances of fraud and to help take legal action when a person or company has already broken the law. Whistleblowers receive protection from retaliation and other actions from the employer when they attempt to report illegal activity.

Although the federal government does not always intervene in these kinds of cases to prosecute them, an individual whistleblower can be involved in the lawsuit on their own or as a party along with the government. If the lawsuit leads to a settlement against the responsible parties, the whistleblower could be eligible to recover a portion of those funds when the case ends.