[co-author: Erin Howard]

On February 9, 2022, the United States Department of Justice (DOJ) announced a $3.8 million settlement with Catholic Medical Center (CMC) of Manchester, New Hampshire. This settlement resolves allegations that CMC violated the False Claims Act (FCA) and federal Anti-Kickback Statute (AKS). The allegations were originally brought in a qui tam lawsuit filed by a physician who is a former employee of CMC.

In its announcement, the DOJ asserts that CMC violated the FCA by providing free call coverage services to a cardiologist to induce patient referrals from the cardiologist, in violation of the AKS. More specifically, the DOJ alleges that over a period of 10 years, CMC paid its own cardiologists to provide call coverage for another cardiologist’s patients when she was on vacation or unavailable. In other words, CMC allegedly relieved the cardiologist of expenses they would otherwise have had to incur to obtain call coverage. According to the DOJ, the cardiologist who received the free call coverage referred to CMC millions of dollars in medical services for which CMC submitted claims to Medicare, Medicaid and other federal health care programs. The DOJ alleges that such claims for reimbursement resulted from unlawful kickbacks in violation of the AKS and were therefore false claims under the FCA. Notably, CMC did not admit liability as part of the settlement agreement.

This settlement highlights to providers the importance of ensuring compliance with the AKS and FCA when providing or offering anything of value to an actual or potential referral source.

*Legal Intern at Robinson+Cole. Erin is not yet admitted to practice law.

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