September 21, 2023. The U.S. Attorney for the Southern District of New York, the U.S. Department of Health and Human Services, Office of Inspector General (HHS-OIG), and the New York Attorney General announced that the United States and New York filed and settled a civil False Claims Act suit suit against Klaus Peter Rentrop and his cardiology practice, Gramercy Cardiac Diagnostic Services P.C. (Gramercy Cardiac). Rentrop and Gramercy Cardiac admitted, acknowledged, and accepted responsibility for paying millions of dollars in kickbacks from 2010 through 2021 to induce physicians to refer Medicare and Medicaid patients to Gramercy-contracted cardiologists and to Gramercy Cardiac for diagnostic tests and procedures, in violation of the Anti-Kickback Statute and the Stark Law. These laws prohibit physicians from referring patients for certain health services – paid for by Medicare – to anyone with whom they have a financial relationship. When a healthcare provider is more interested in the benefit of a kickback at an affiliated facility, they may recommend and order services that a patient does not actually need or would harm the patient to maximize their affiliate’s reimbursement from government healthcare programs.
These kickbacks came in the form of “rental payments” and fees paid to contracted cardiologists. Rentrop and Gramercy Cardiac entered into office space rental agreements with physicians and/or their medical practices for an inflated amount. These agreements provided for the use of exam rooms a few times a month, as well as for the use of basic equipment, and front desk staff. The physicians and medical practices would refer their patients to cardiologists that Rentrop and Gramercy Cardiac entered into independent contractor agreements with (Gramercy-Contracted Cardiologists), who saw patients at the rental office spaces. This was done in exchange for the inflated “rental payments.” The Gramercy-Contracted Cardiologists would then refer these patients to Gramercy Cardiac for cardiac diagnostic tests and procedures. These cardiologists were paid a flat fee for each procedure performed on referred patients at a Gramercy Cardiac location, with larger fees paid for tests and procedures for which Gramercy Cardiac received a greater reimbursement from Medicare and Medicaid. Rentrop insisted on a minimum return on investment of at least 300% from the kickbacks, and directed his staff to calculate their return on investments to ensure he was making the profits he wanted.
The physicians and medical practices that were receiving Rentrop’s inflated rental payments referred tens of thousands of patients to the Gramercy-Contracted Cardiologists, who, according to the complaint, referred more than 23,000 patients for PET and SPECT scans at Gramercy Cardiac in this eleven-year period. A significant proportion of these patients were Medicare or Medicaid beneficiaries, and Gramercy Cardiac billed Medicare and Medicaid for such procedures. The claims submitted for payments were tainted by kickbacks, violating the False Claims Act.
Under the settlement agreement, Rentrop and Gramercy Cardiac will pay over $4.5 million to the United States and almost $2 million to the State of New York to resolve the claims, for a total recovery of $6.5 million. Additionally, they have accepted responsibility for their actions and Rentrop will relinquish his ownership and control over Gramercy Cardiac by the end of 2023, paying a portion of the money from selling the practice to the United States. Rentrop is indefinitely barred from working for any entity that bills federal healthcare programs, and as a part of a Voluntary Exclusion Agreement with HHS-OIG, he is prohibited from, among other things, participating in Medicare, Medicaid, or other federal healthcare programs for five years. The U.S. Attorney for the Southern District of New York said, “The Anti-Kickback Statute is meant to ensure that when making medical decisions, a doctor considers only the patient’s best interests — not the doctor’s or others’ financial interests. The defendants violated those doctor-patient relationships through their kickback arrangements, and now they are being held to account.”
In connection with the filing of the lawsuit and settlement, the Government joined a private whistleblower lawsuit that had been filed under seal pursuant to the False Claims Act. The relator is entitled to 15-25% of the government’s recovery in a qui tam False Claims Act settlement.
If you would like to report healthcare fraud including violations of the Anti-Kickback Statute and Stark Law, you can contact attorneys at Tycko & Zavareei LLP. Eva Gunasekera and Renée Brooker are former officials of the United States Department of Justice and prosecuted whistleblower cases under the False Claims Act. Renée served as Assistant Director at the United States Department of Justice, the office that supervises False Claims Act cases in all 94 United States District Courts. Eva was the Senior Counsel for Health Care Fraud. Eva and Renée now represent whistleblowers. For a free consultation, you can contact Renée at [email protected] (tel.: 202-417-3664) or contact Eva Gunasekera at [email protected]. You can also go to Tycko & Zavareei LLP’s website for whistleblowers to learn more at www.fraudfighters.net.