In 2014, BAYADA acquired the assets of two home health agencies from an Arizona retirement home and continued to care for the patients referred to them by the facility. Three years later, in 2017, a former contractor filed a qui tam civil lawsuit, claiming those acquisitions were a disguise for illegal kickbacks for referrals. Four years after that, BAYADA reached an agreement with the Department of Justice. In a September 8, 2021 statement, the DoJ explained that the company had resolved the allegations with a $17 million payment.
Under provisions of the False Claims Act, the DoJ statement explained, "a private party can file a civil action on behalf of the United States and receive a portion of any recovery. As part of today’s resolution, Mr. Freedman will receive more than $3 million." Freedman served as BAYADA's Director of Strategic Growth for just under eight years, leaving shortly before filing his lawsuit. He is currently listed as the owner of Freedman Consulting, 2123 Truxtun Rd., in San Diego.
While the accusation was made under the False Claims Act, BAYADA asserts that all patient care activities were actually performed. The technicality that those patients came from challenged referrals is what put the Medicare claims in jeopardy, not any attempt to bill for unprovided services.
"BAYADA was disappointed to learn that in August 2017, a former contractor filed a civil lawsuit in the United States District Court for the District of New Jersey under the qui tam provisions of the federal False Claims Act, alleging that BAYADA’s acquisition of the assets of two home health agencies in Arizona back in 2014 violated federal health care law.
While BAYADA does not believe it has done anything wrong and continues to deny the allegations, the company recently entered into a settlement with the federal government to avoid the significant expense of protracted litigation and allow our focus to remain on providing high quality home health care to our patients. It is important to note that the allegations in this matter do not relate in any way to patient care. All of the care provided to our patients was medically necessary, and neither the relator nor the government have alleged anything to the contrary.
The Office of Inspector General of the U.S. Department of Health and Human Services has reviewed this matter and the settlement agreement and has concluded that it would not impose a corporate integrity agreement upon BAYADA under the circumstances of these allegations.
As a leading not-for-profit provider of in-home health and support services, we take our responsibility to comply with all laws governing home health care providers seriously. BAYADA is fully committed to our mission to deliver quality care with compassion, excellence, and reliability to help people live safely at home with comfort, independence, and dignity.
BAYADA, BAYADA Home Health Care Inc., BAYADA Health LLC and BAYADA Home Care (collectively, the BAYADA Companies), headquartered in Moorestown, New Jersey, have agreed to pay $17 million to resolve allegations that they violated the False Claims Act's Anti-Kickback Statute by paying a kickback to a retirement home operator by purchasing two of its home health agencies (HHAs) located in Arizona.
The United States alleges that the BAYADA Companies bought the two HHAs to induce referrals to BAYADA of Medicare beneficiaries from retirement communities operated by the seller throughout the United States, and that from Jan. 1, 2014 through Oct. 31, 2020, the BAYADA Companies submitted false claims for payment to Medicare for services provided to beneficiaries referred to BAYADA as a result of the kickback transaction.
"Parties who pay or receive kickbacks in order to induce referrals undermine the integrity of the health care system," said Acting Assistant Attorney General Brian M. Boynton of the Justice Department's Civil Division. "This resolution reflects the department's commitment to protect the right of federal health care program beneficiaries to receive medical care that is not influenced by the financial interests of their health care providers."
"When healthcare providers make or induce referrals that are based on kickback arrangements rather than the best interests of patients, they risk patient harm, threaten the integrity of federal healthcare programs and violate federal law," said Acting U.S. Attorney Rachael A. Honig for the District of New Jersey. "The U.S. Attorney's Office for the District of New Jersey and our partners in the Department of Justice and at the Department of Health and Human Services Office of Inspector General will continue to pursue those who offer kickbacks for patient referrals, no matter the disguise those kickback arrangements might wear."
The Anti-Kickback Statute prohibits parties who participate in federal health care programs from knowingly and willfully offering, paying or receiving any remuneration in order to induce the recommendation of any item for which payment is made in whole or in part under a covered federal health care program. The prohibition extends to asset purchases that are intended to induce referrals.
The settlement with the BAYADA Companies includes the resolution of claims brought under the qui tam or whistleblower provisions of the False Claims Act by David Freedman, who was the former director of strategic growth for BAYADA between 2009 and 2016. Under those provisions, a private party can file a civil action on behalf of the United States and receive a portion of any recovery. As part of today's resolution, Mr. Freedman will receive more than $3 million. The matter remains under seal as to allegations against entities other than the BAYADA Companies.
The resolution obtained in 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 assistance from the HHS-OIG.
The investigation and resolution of this matter illustrates the government's emphasis on combating health care fraud. One of the most powerful tools in this effort is the False Claims Act. Tips and complaints from all sources about potential fraud, waste, abuse and mismanagement, can be reported to HHS at 800-HHS-TIPS (800-447-8477).
The matter was handled by Trial Attorney Samson Asiyanbi of the Fraud Section and Assistant U.S. Attorney Daniel Meyler for the District of New Jersey.
The claims resolved by the settlement are allegations only and there has been no determination of liability.
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