It is often believed that in order to satisfy the False Claims Act’s “original source” requirement, one must be a former employee, patient, or colleague of the alleged fraudulent party. However, as today’s case illustrates, a whistleblower can be anyone – including a competitor. In a case unsealed late March of this year, a former competitor of home healthcare provider Prime Health Care Services, Inc. caught a glimpse of unlawful conduct during a routine transaction, and quickly reported the findings to an experienced whistleblower attorney. The facts of today’s case will hopefully encourage you to seek assistance with your whistleblower case, even if you are not in daily direct contact with the alleged perpetrator.
Details of U.S. ex. rel. Stephens v. Malik, et al.
Today’s case represents allegations of unlawful kickbacks, inappropriate business relationships, and unjust enrichment in violation of the False Claims Act and Stark Law. The facts of the case begin with a meeting between the realtor and Dr. Arshad Malik – a physician practicing in Indiana. At the meeting, the relator inquired about a referral made by Dr. Malik to the relator’s employer for speech therapy services. Dr. Malik curiously refused to sign any referral agreement with the relator and insisted the patient remain under his own care.
Shortly thereafter, Dr. Malik contacted the relator and indicated he would be willing to sign a referral agreement. Upon appearing at the doctor’s office to retrieve the form, the relator noticed “an absurdly large number of referral documents to Prime Care and no other.” Upon questioning, Dr. Malik indicated he only sends patients to Prime Health Care Services because his brother owns the organization.
Upon further review and inquiry by the relator, it became clear that Dr. Malik was allegedly maintaining an inappropriate financial interest in Prime Health Care Services by virtue of the fact his family member was the owner of the entity.
Moreover, the relator alleges Dr. Malik routinely billed government healthcare agencies for home health services that were not medically necessary – as home-based healthcare is one of the more costly services available under Medicare and Medicaid.
The U.S. government opted to partially intervene in the case for purposes of litigating the Stark Law issue. The case is still pending.
Applicability of the Stark Law
Under the Stark Law, it is considered a violation for a physician to make referrals to another medical entity in which the referring physician or his immediate family member maintains a financial interest. While certain exceptions may apply, any submissions for reimbursement for services rendered under an unlawful referral arrangement are considered false claims – punishable by a penalty of up to $11,000 per violation. The Stark Law defines “immediate family member” as a husband or wife, parent, child, sibling, stepparent, stepchild, stepbrother, stepsister, father-in-law, mother-in-law, son-in-law, daughter-in-law, brother-in-law, sister-in-law, grandparent or grandchild, and spouse of a grandparent or grandchild.
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