A whistleblower lawsuit accusing Brevard County, Florida’s Health First Inc. of operating an illegal kickback scheme was amended Sunday to include three of the non-profit health system’s executives and the heads of two affiliated companies.

Omni Healthcare Inc., a Melbourne, Florida-based physician’s group, filed the original whistleblower lawsuit under the False Claims Act (FCA) in November, alleging Health First conspired to create a system that rewards doctors who direct patients to Health First and other arrangements that violate the federal Anti-Kickback Statute and Stark Law. The laws are intended to combat illegal compensation schemes that restrict competition and drive up Medicare and Medicaid costs.

Health First CEO named as defendant

Omni amended the complaint to include Health First CEO Steven Johnson, former chief financial officer Joseph Felkner, and chief strategy officer Drew Rector. Also added to the whistleblower lawsuit were Jeffrey Stalnaker, CEO of Health First Medical Group, a multidisciplinary group of physicians, and Health First Health Plans CEO Matthew Gerrell. Several oncologists and cardiologists were also added to the complaint.

Omni alleges that Health First CEO Johnson is “the principal architect” of the kickback scheme, which allegedly tied doctors’ pay to the number of referrals they made within the Health First network.

“In an effort to tighten Health First’s grip on the market and to bolster finances, defendants worked together to engage in practices that led to purposefully billing federal health care programs for claims which were tainted by violations of the [Anti-Kickback Statute] and Stark [Act], and which violated the [False Claims Act],” the whistleblower lawsuit said, according to Law 360.

Omni alleges that Health First rewarded physicians who engaged in the scheme in a number of ways, including higher pay for high referrals, paid medical directorships for doctors with lots of referrals, and arbitrarily boosting the pay of referring physicians.

Multiple whistleblower lawsuits

Health First called Omni’s accusation “appalling” and “groundless.” It accused Omni of diverting the hospital system’s focus and resources on litigation instead of the COVID-19 pandemic, according to Law 360.

It’s not unusual for defendants in False Claims Act cases to portray themselves, their patients, and U.S. taxpayers as the victims of whistleblower litigation, often by claiming that the costs of the lawsuits translate to higher costs for everyone.

However, Law 360 notes that Health First has been sued by other whistleblowers accusing the company of improper conduct, including one lawsuit brought by doctors who alleged the company threatened to renew only the contracts of those who admitted patients exclusively to Health First providers. That lawsuit sought $360 million in damages but was settled for an undisclosed amount in 2016.

Have you witnessed fraud against the U.S. government?

Beasley Allen has a Whistleblower Litigation Team in place to handle FCA claims. Due to our firm’s heavy involvement in whistleblower litigation, there was a definite need for the creation of a team focusing on whistleblower cases. Fraud against the federal government has been and continues to be a huge problem, involving many industries in this country, and is usually rampant in the wake of disasters requiring federal assistance, such as major hurricanes, the Deepwater Horizon oil spill and, as we have seen in recent months, the coronavirus pandemic. We expect the amount of fraud against the government to increase greatly during the coming months.

As we have consistently stated, whistleblowers are the key to exposing corporate wrongdoing and government fraud. A person who has first-hand knowledge of fraud or other wrongdoing may have a whistleblower case. Before you report suspected fraud or other wrongdoing – before you “blow the whistle” – it is important to make sure you have a valid claim and that you are prepared for what lies ahead. Beasley Allen’s group of lawyers dedicated to handling whistleblower cases can help you navigate the oftentimes risky and complex litigation.

Lawyers on our whistleblower litigation team are Lance GouldLarry GolstonLauren MilesLeon HamptonLeslie PesciaPaul Evans and Tyner Helms. If you are aware of fraud being committed against the federal or state governments, you could be rewarded for reporting the fraud. If you have any questions about whether you qualify as a whistleblower, you can contact a lawyer at Beasley Allen for a free and confidential evaluation of your claim.

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