February 24, 2020

February 24, 2020

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William Beaumont Hospital to Pay $84.5 Million to Settle Allegations of Improper Payments to Referring Physicians

On Thursday, August 2, 2018, the Department of Justice announced that William Beaumont Hospital, a regional hospital system based in the Detroit area, had agreed to pay $84.5 Million to settle allegations brought by four false claims act whistleblowers, including a nationally renowned neuroscientist and medical doctor. The allegations against William Beaumont revolved around violations of the Anti-Kickback Statute and the “Stark Law,” both of which, in the medical context, prohibit healthcare providers from providing kickbacks and other kinds of renumeration to induce referrals of items or services covered by Medicare, Medicaid, and other federally funded programs. As noted by Justice Department official Chad A. Readler, these kinds of inducements, which include everything from cash payments to below-market rent and office staff “undermine[] the integrity of our health care system” by compromising “the unfettered, independent judgment of . . . health care professionals” that patients deserve.

Government officials heralded the settlement as a victory in the fight against corrupt financial arrangements that erode patients’ and taxpayers’ trust in medical institutions and federal health care programs. U.S. Attorney Matthew Schneider promised the public and warned healthcare organizations that he and his colleagues would continue to “aggressively take action to recover monies wrongfully billed to Medicare” using the powerful tool of the False Claims Act.

Unscrupulous healthcare providers have found many different ways to take advantage of vital government programs like Medicare. The False Claims Act has been an important weapon in the fight against government programs fraud since it was first enacted to combat war profiteering during the Civil War. But the system depends on healthcare whistleblowers telling their story with the help of an experienced False Claims Act attorney.

David Felten, a highly accomplished physician and neuroscientist, first became concerned about illegal kickbacks to doctors at William Beaumont after he was hired as Vice President of Research in 2005. Despite his title and reputation, he was unable to make any changes to William Beaumont’s practices from within the organization. In 2010 he and his team of Medicare fraud attorneys filed a false claims act lawsuit in an attempt to enact the changes he couldn’t achieve through other means. Three other whistleblowers soon joined him by filing their own qui tam lawsuits in 2011. 15%-25% of the $84.5 million settlement will be paid out to the four whistleblowers under a provision of the False Claims Act that permits whistleblowers to share in any funds recovered by the government due to their efforts.

© 2020 by Tycko & Zavareei LLP


About this Author

Jonathan K. Tycko, Civil Litigation Attorney, Tycko Zavareei Law firm

Mr. Tycko has represented clients in numerous qui tam whistleblowing cases, in areas including Medicare fraud, government contracts fraud, and tax fraud. In addition, with the 2010 passage of the Dodd-Frank Act, Mr. Tycko’s practice has expanded into representation of whistleblowers in the areas of securities and commodities, and violations of the Foreign Corrupt Practices Act.

Mr. Tycko focuses his practice on civil litigation, with special concentrations in whistleblower cases, consumer class actions, unfair competition litigation, employment litigation and housing litigation. He...