The U.S. Department of Justice announced that Watermark Retirement Communities LLC, a senior living community operator based in Tucson, Arizona, has agreed to pay a settlement of $4.25 million to resolve allegations of violating the Anti-Kickback Statute (AKS) and False Claims Act (FCA).  

The FCA prohibits any person from knowingly presenting, or causing to be presented, a false or fraudulent claim for payment to the federal government.  And AKS prohibits, among other things, knowingly and willfully paying or receiving payment (i.e., anything of value) in exchange for federal healthcare program referrals.  Submitting claims to a federal healthcare program tainted by an AKS violation may also amount to false claims under the FCA.

Watermark allegedly entered into a scheme with a home health agency operator to induce referrals of Medicare beneficiaries living in Watermark residential communities. The scheme specifically targeted eight Watermark retirement homes in five states, including Arizona, Connecticut, Delaware, Florida, and Pennsylvania, where both companies had overlapping operations. The government alleged that between January 1, 2014, and October 31, 2020, Watermark caused the HHA operator to submit false claims for payments to Medicare for services provided to Medicare beneficiaries referred because of the alleged kickback transaction.  

The government has and continues to take kickbacks seriously.  Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division, stressed the importance of upholding the integrity of healthcare decisions and holding those involved in kickback schemes accountable. He explained, “It is imperative that decisions about the care provided to federal health care beneficiaries are not undermined by the payment of kickbacks.”

The settlement resolves a lawsuit brought under the qui tam or whistleblower provisions of the False Claims Act.  The qui tam provisions provide financial incentives and a procedural structure to whistleblowers – or relators – so individuals could bring false claims act cases on behalf of the government.  The financial incentive can be significant, as whistleblowers have the right to 15% to 30% of the money the government recovers, based on several factors. In this case, a former director of strategic growth for the HHA operator brought this qui tam caseAccording to the press release, the relator will receive approximately $765,000 as part of the resolution.

The qui tam case is captioned United States ex rel. Freedman v. Bayada Home Health Care, Inc., Civ. No. 17-6267 (D.N.J.).

The resolution of this matter was the result of a coordinated effort between the Justice Department’s Civil Division, Commercial Litigation Branch, Fraud Section, and the U.S. Attorney’s Office for the District of New Jersey, with help from the Department of Health and Human Services Office of Inspector General.

The attorneys at Chilivis Grubman represent clients of all types and sizes in connection to health care fraud and False Claims Act litigation. If you need assistance with such a matter, please contact us today.