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Whistleblower Awarded $1.8 Million for Reporting Hospital Admissions Kickback Scheme

16 January 2025. Healthcare professionals play a critical role in ensuring the integrity of the industry. However, unlawful kickbacks and fraudulent claims, if left unreported, undermine the quality of patient care and solvency of government-funded healthcare programs. A recent case involving Oroville Hospital highlights not just the consequences of violating regulations such as the False Claims Act and Anti-Kickback Statute but also the importance of whistleblowers in combatting such schemes.

Oroville Hospital Settlement Details

Oroville Hospital has agreed to pay $10.25 million to resolve allegations of participating in an illegal kickback and self-referral scheme. The settlement is divided, with $9,518,954 going to the federal government and $731,046 to the State of California.

The allegations claim that Oroville Hospital:

  1. Paid Illegal Kickbacks to Physicians – Oroville Hospital allegedly incentivized physicians responsible for inpatient admissions by offering bonuses tied to how many patients they admitted. This practice incentivized unnecessary hospital stays, jeopardizing patient welfare and inflating healthcare costs.
  2. Falsely Billed Medicare and Medi-Cal – The hospital allegedly admitted patients who did not need inpatient care. Furthermore, they also allegedly added false diagnosis codes such as systemic inflammatory response syndrome (SIRS) to claims, inflating reimbursements from Medicare and Medicaid (Medi-Cal in California).

The Vital Role of Whistleblowers in Healthcare Compliance

The Oroville Hospital case underscores the critical importance of whistleblowers in protecting healthcare systems from unlawful practices. The allegations in this case were originally brought forward by a private individual under the qui tam provisions of the False Claims Act.

Under the qui tam provision, whistleblowers can file lawsuits on behalf of the government and potentially receive a portion of any monetary recovery resulting from the case. The whistleblower received approximately $1.8 million or about 17% of the settlement for her role in exposing these unlawful activities.

Why Whistleblowers Are Essential

Whistleblowers are often employees or professionals working within the healthcare system who become aware of illegal or unethical practices. Here is why their role is indispensable:

1. Preventing Patient Harm
Unethical behavior, such as unnecessary hospitalizations or improper medical diagnoses, can seriously harm patients. Whistleblowers bring attention to these issues and ensure medical practices prioritize patient health over profit.

2. Protecting Government Resources
Fraudulent claims and improper billing practices drain billions of dollars each year from federal programs such as Medicare, Medicaid, TRICARE, and FEHB. Whistleblowers help uncover these schemes, ensuring that taxpayer funds are used effectively and healthcare remains affordable.

3. Encouraging Transparency and Accountability
By exposing unlawful actions, whistleblowers hold organizations accountable and encourage others in the industry to comply with regulations such as the Anti-Kickback Statute and the False Claims Act.

4. Facilitating Internal Improvements
When courts order companies to implement Corporate Integrity Agreements or similar oversight measures as a result of whistleblower actions, healthcare organizations are compelled to implement stronger compliance frameworks, reducing the risk of future violations.

If you would like to report Medicare fraud or unlawful kickback schemes, 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. Eva was the Senior Counsel for Health Care Fraud. 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 and Renée now represent whistleblowers. For a free consultation, you can contact Eva Gunasekera at [email protected] or contact Renée at [email protected] (tel.: 202-417-3664). Visit Tycko & Zavareei LLP’s website for whistleblowers to learn more at www.fraudfighters.net.

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