United States Files Suit Against California Skilled Nursing Chain and its Owner for Allegedly Paying Illegal Kickbacks to Physicians
LOS ANGELES – The United States has filed a complaint under the False Claims Act against a Vacaville company alleging one of its owners and seven skilled nursing facilities (SNFs) “systematically paid money to referring physicians…to induce those physicians to make patient referrals, in knowing and willful violation” of the federal Anti-Kickback Statute.
The complaint in intervention, which was filed in United States District Court in Los Angeles late Monday, names as defendants Paksn Inc.; Prema Thekkek, one of its owners; and seven SNFs owned by Thekkek and/or operated by Paksn.
The United States alleges that the defendants entered into medical directorship agreements with certain physicians that purported to provide compensation for administrative services, but in reality, were vehicles for the payment of kickbacks to induce the physicians to refer patients to the seven SNFs. The Anti-Kickback Statute prohibits offering or paying anything of value to encourage the referral of items or services covered by federal health care programs.
Those seven SNFs are four facilities in Hayward – Bay Point Healthcare Center, Gateway Care & Rehabilitation Center, Hayward Convalescent Hospital, and Hilltop Care & Rehabilitation Center – as well as Martinez Convalescent Hospital, Park Central Care & Rehabilitation Hospital in Fremont, and Yuba Skilled Nursing Center.
The United States specifically alleges that the defendants hired certain physicians who promised in advance to refer a large number of patients to the SNFs, paid physicians in proportion to the number of expected referrals, and terminated physicians who did not refer enough patients.
On one occasion, a Paksn employee told Thekkek that two physicians were being hired because “they are promising at least 10 patients for $2000 per month.” On another, Thekkek complained that if Paksn’s employees did not pay medical directors promptly every month, “[t]hese doctors will not give us patients.” On a third occasion, a Paksn employee told Thekkek that because “lately there are no real referrals” from one of the medical directors, “i am planning to say goodbye to him.”
“The payment of kickbacks to physicians for referrals turns patients into commodities that can be traded,” said Acting United States Attorney Tracy L. Wilkison. “Profits should not dictate medical decisions, which is why it is illegal to pay for referrals that can cloud physicians’ medical judgment.”
“Illegal financial arrangements with physicians can improperly influence the type and amount of health care that is provided to patients,” said Acting Assistant Attorney General Brian M. Boynton of the Justice Department’s Civil Division. “The department is committed to redressing the corrupting influence of kickbacks on the medical decision making of providers participating in federal health care programs.”
This case was initially filed in December 2015 by Trilochan Singh, who was previously employed as Paksn’s vice president of operations and chief operating officer, under the whistleblower provisions of the False Claims Act. Those provisions authorize private parties to sue on behalf of the United States for false claims and share in any recovery. The Act permits the United States to intervene and take over the lawsuit, as it has done here in part. Those who violate the Act are subject to treble damages and applicable penalties.
The case is captioned United States of America ex rel. Trilochan Singh v. Paksn, Inc., et al., CV15-9064.
The United States’ intervention in this matter illustrates the government’s emphasis on combating health care fraud. One of the most powerful tools in this effort is the False Claims Act. Tips and complaints from all sources about potential fraud, waste, abuse and mismanagement can be reported to the Department of Health and Human Services, at 800-HHS-TIPS (800-447-8477).
This matter is being handled by the Civil Division’s Commercial Litigation Branch (Fraud Section) and the United States Attorney’s Office for the Central District of California (Civil Fraud Section), with assistance from the U.S. Department of Health and Human Services’ Office of Inspector General.
The claims asserted against defendants are allegations only and there has been no determination of liability.