On November 15, 2023, the United States Attorney’s Office for the Central District of California announced that Prema Thekkek, her Vacaville-based management company, Paksn Inc., and six skilled nursing facilities (SNFs) owned by Thekkek and/or operated by Paksn have agreed to enter into a $45.6 million consent judgment to resolve allegations that they submitted or caused the submission of false claims to Medicare by paying kickbacks to physicians to induce patient referrals.
The Anti-Kickback Statute prohibits offering or paying remuneration to induce the referral of items or services covered by Medicare, Medicaid and other federally funded health care programs. It is intended to ensure that medical decision-making is based on the best interests of patients and not compromised by improper financial incentives to providers.
The government alleged that from 2009 to 2021, the SNF Defendants, under the direction and control of Thekkek and Paksn, systematically entered into medical directorship agreements with physicians that purported to provide compensation for administrative services, but in reality were vehicles for the payment of kickbacks to induce the physicians to refer patients to the six SNFs. Specifically, the government alleged that the defendants hired physicians who promised in advance to refer a large number of patients to the SNFs, paid physicians in proportion to the number of their expected referrals, and terminated physicians who did not refer enough patients.
For example, on one occasion, a Paksn employee allegedly told Thekkek that two physicians were being hired because “they are promising at least 10 patients for $2000 per month,” to which Thekkek allegedy responded, “good job. Make sure they give you patients everyday. [W]e can also expand to other buildings with them, if possible.” On another occasion, an employee allegedly informed Thekkek that the defendants previously had paid a certain doctor “$1500 each month and he only send [sic] us 2 patients[,] so we didn’t pay him anything from Jan[uary] onwards.” On a third occasion, Thekkek allegedly rejected a proposed stipend for a new medical director, explaining that the defendants had paid the previous medical director that amount because “we were getting admission[s] from him,” whereas she did not expect the new medical director to refer many patients. More generally, Thekkek allegedly complained that if her employees did not pay medical directors promptly every month, “[t]hese doctors will not give us patients.”
Under the settlement, in addition to entering into a $45,645,327.25 consent judgment, the defendants agreed to make scheduled payments to the United States of at least $385,000 over the next five years. That payment schedule was negotiated based on the defendants’ lack of ability to pay.
In addition to resolving their False Claims Act liability, the defendants have entered into a five-year corporate integrity agreement with the HHS-OIG which requires, among other compliance obligations, an Independent Review Organization’s review of their physician relationships.
The settlement stems from a whistleblower complaint filed in 2015 by Paksn’s former Vice President of Operations and Chief Operating Officer, Trilochan Singh, pursuant to the qui tam provisions of the False Claims Act, which permit private persons to bring a lawsuit on behalf of the government and to share in the proceeds of the suit. The Act also permits the government to intervene and take over the lawsuit, as it did in this case as to some of Singh’s allegations.
If you have information regarding false claims having been submitted to Medicare, Medicaid, TRICARE, other federal health care programs, or to other federal agencies/programs, and the information is not publicly known and no actions have been taken by the government with regard to recovering the false claims, you should promptly consult with a False Claims Act attorney (also known as qui tam attorneys) in your U.S. state who may investigate the basis of your False Claims Act allegations and who may also assist you in bringing a qui tam lawsuit on behalf of the United States, if appropriate, for which you may be entitled to receive a portion of the recovery received by the U.S. government.
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