ChristianaCare pays $47 million to settle alleged kickback scheme

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ChristianaCare Health System in Delaware has agreed to pay more than $47 million to settle a whistleblower lawsuit alleging the health system gave kickbacks to physicians for patient referrals. The kickbacks resulted in fraudulent Medicaid billing, according to the lawsuit. The settlement includes no admission of liability by the health system.

The lawsuit was brought in 2017 by whistleblower Ronald Sherman, the health system's former chief compliance officer, and by the United States for the Department of Health and Human Services and for the Center for Medicare and Medicaid Services.

The settlement was announced Friday after the case had been under seal for more than a year.

WHY THIS MATTERS

Specifically, starting sometime prior to 2010, Christiana had an exclusive contract with a private outside neonatology group of physicians, Neonatology Associates. The neonatology group would manage all care and procedures in the Neonatal Intensive Care Unit at Christiana Hospital and would subsequently bill a 24-hour global/bundled CPT code to government healthcare programs for the work performed. 

In violation of the law, Christiana allegedly provided free services to Neonatology Associates in the form of professional care provided to infants in the NICU by Christiana-employed hospitalists, residents and nurse practitioners, the lawsuit said.

The lawsuit claims that these Christiana employees provided most of the professional care and procedures in the NICU, while Neonatology Associates Case billed for and was reimbursed for the care and procedures. 

Christiana provided these free services in exchange for referrals of patients.

Sherman became aware of similar alleged kickback schemes in the neurosurgical practice, the cardiovascular surgery practice, the ear, nose, and throat practice, and the urologic surgery practice. 

Both Christiana and the private surgical groups in these practice areas subsequently submitted claims for the care provided to patients. The private physicians billed the government as if they themselves had performed services, when in fact the services were provided by Christiana hospital employees, the complaint said. 

The private physicians often billed for services they allegedly provided – but in fact were provided by Christiana employees – on days the doctors were not at Christiana. 

In exchange for the unearned billings, the physicians continued to funnel patients to ChristianaCare, rather than other hospitals, according to Fortune Well.

The alleged fraud occurred between 2011 and 2017.

THE LARGER TREND

This is believed to be the largest False Claims Act settlement in Delaware history and the first in a series of cases that are likely to be brought against other hospitals across the nation, according to Delaware online. This is the first FCA settlement based on a hospital allegedly providing private physicians with free services in the form of hospital-employed nurse practitioners and physician assistants, according to attorney Dan Miller of Walden Macht & Haran, the law firm representing the whistleblower. Any other hospital in the country that operates under the model that led to this settlement should consider changing its practices immediately or risk a whistleblower lawsuit, Miller said, according to Delaware online.

ChristianaCare Health Services is a privately-owned, not-for-profit health system that includes two hospitals, Christiana Hospital in Newark and Wilmington Hospital, located in Wilmington. 

Christiana Hospital is a high-risk-delivery hospital offering a Level III neonatal intensive care unit ("NICU"). Over 7,200 babies are born at Christiana Hospital each year. 

Twitter: @SusanJMorse
Email the writer: SMorse@himss.org