U.S. files suit against California skilled nursing chain, owner
The United States filed a complaint in the U.S. District Court for the Central District of California on Monday against a state skilled nursing chain and its owner – the company owns a Yuba City skilled nursing center.
According to the Department of Justice, the complaint was filed under the False Claims Act against Paksn Inc.; Prema Thekkek, one of its owners; and seven skilled nursing facilities owned by Thekkek and/ or operated by Paksn. Those seven facilities are Yuba Skilled Nursing Center, Bay Point Healthcare Center, Gateway Care & Rehabilitation Center, Hayward Convalescent Hospital, Hilltop Care & Rehabilitation Center,
Martinez Convalescent Hospital, and Park Central Care & Rehabilitation Hospital.
The United States alleges that the defendants entered into medical directorship agreements with certain physicians that purported to provide compensation for administrative services but were actually vehicles for the payment of kickbacks to induce the physicians to refer patients to the seven facilities, according to a press release.
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.
Specifically, according to the DOJ, the U.S. alleges that defendants hired certain physicians who promised in advance to refer a large number of patients to the facilities, 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 reportedly told Thekkek that two physicians were being hired because “they are promising at least 10 patients for $2,000 per month.” On another occasion, Thekkek allegedly 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 reportedly told Thekkek that because “lately there are no real referrals” from one of the medical directors, “I am planning to say goodbye to him.”
“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 in the press release. “The department is committed to redressing the corrupting influence of kickbacks on the medical decision making of providers participating in federal health care programs.”
The lawsuit 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.
According to the DOJ, 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 U.S. 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 payment of kickbacks to physicians for referrals turns patients into commodities that can be traded,” said Acting U.S. Attorney Tracy L. Wilkison for the Central District of California in a press release. “Profits should not dictate medical decisions, which is why it is illegal to pay for referrals that can cloud physicians’ medical judgment.”
The matter is being handled by the Civil Division’s Commercial Litigation Branch (fraud section) and the U.S. Attorney’s Office for the Central District of California, with assistance from the U.S. Department of Health and Human Services Office of Inspector General.