Whistleblower Nets $5.4 Million in $24 Million Settlement

Montana-based Kalispell Regional Healthcare System (KRH) and six of its subsidiaries and related entities have agreed to pay $24 million to settle a whistleblower lawsuit with the Department of Justice (DOJ).

In a two-year investigation, the Department of Justice uncovered evidence that 63 physicians were involved in an illegal kickback scheme with KRH. The DOJ alleged that the compensation arrangements between the hospital group and its physicians violated the federal Anti-Kickback Statute, the False Claims Act and the Stark Law, which prohibit physician self-referrals.

The illegal physician compensation scheme involved orthopedic surgeons, cardiologists, cardiovascular surgeons, gastroenterologists, internal medicine physicians, general surgeons, neurosurgeons, surgical oncologists, radiation oncologists, breast surgeons, neurologists, and gynecologists.

The government became aware of the violations when whistleblower Jon Mohatt filed two lawsuits under the False Claims Act, which allows private parties to bring suits on behalf of the government and to share in any recovery. Mohatt was formerly the Chief Financial Officer of KRH’s Physician Network. Mohatt will receive $5,411,521 million as his share of the recovery.

Following the settlement, United States Attorney for the District of Montana Kurt Alme stated, “Quality healthcare is a critical need of all Montanans, but paying extra to physicians to induce referrals improperly raises the cost of that healthcare and must stop … I would like to thank the team that worked hard to bring this to a quick and successful resolution, which is the largest False Claims Act recovery in the District of Montana, including members of the U.S. Department of Justice and U.S. Attorney’s Office, as well as agents with the Department of Health and Human Services-Office of Inspector General and the Federal Bureau of Investigation.”

OTW spoke with Bryan Vroon, lead counsel and spokesman for the whistleblower Jon Mohatt. Vroon has served as lead counsel for whistleblowers in 85 settlements involving false claims against federal healthcare programs resulting in over $384 million in recoveries to the Federal Treasury since 2010.

Vroon said, “Orthopedic surgery is a lucrative service line for hospital systems. Physician compensation packages that take into account the value of orthopedic admissions or procedures to the hospital system are detrimental to the Medicare Program and violate the Stark Law. Whistleblowers can have a significant impact if they are willing to step forward in the interests of Medicare, Medicare patients, and American taxpayers.”