Indiana U pays $18 million to settle kickback case

Indiana University Health Inc. (IU Health) and HealthNet Inc., have agreed to pay $18 million to settle allegations that they violated federal and state false claims laws by engaging in an illegal kickback scheme related to the referral of HealthNet’s OB/GYN patients to IU Health’s Methodist Hospital. The United States alleged that from May 1, 2013 through Aug. 30, 2016, IU Health provided HealthNet with an interest-free line of credit, the balance of which consistently exceeded $10 million. United States further alleged that HealthNet was not expected to repay a substantial portion of this loan and that this financial arrangement was intended to induce HealthNet to refer its OB/GYN patients to IU Health’s Methodist Hospital.Under the settlement agreement, IU Health and HealthNet each will pay approximately $5.1 million to the United States and $3.9 million to the State of Indiana.

The Anti-Kickback Statute prohibits, among other things, the knowing and willful payment of any remuneration to induce the referral of services or items that are paid for by a federal health care program, such as Medicaid. Claims submitted to federal health care programs in violation of the Anti-Kickback Statute are also false claims under the False Claims Act.

The settlement resolves a lawsuit filed in federal court in Indianapolis, Indiana, under the qui tam provisions of the False Claims Act, which permit private individuals to bring a lawsuit on behalf of the United States for false claims and to share in any recovery. The lawsuit was filed by Dr. Judith Robinson, who formerly held a number of positions at both Methodist Hospital and HealthNet. Under the settlement, Dr. Robinson, represented by The Hoyer firm, will receive approximately $2.8 million out of the federal share of the recovery.

The lawsuit is captioned United States et al. ex rel. Robinson v. Indiana University Health, Inc. et al., Case No. 1:13-cv-2009-TWP-MJD (S.D. Ind.). The claims resolved by the settlement are allegations only, and there has been no determination of liability.

Jeffrey Newman represents whistleblowers nation wide but did not represent the whistleblower in this case.