Indiana University Health and HealthNet to pay $18 million to resolve False Claims Act allegations

Indianapolis – Josh J. Minkler, the United States Attorney, announced today an $18 million civil settlement with Indiana University Health, Inc., and HealthNet, Inc. The settlement will resolve allegations that IU Health and HealthNet violated the False Claims Act by submitting claims to the Government in violation of the Anti-Kickback Statute. Under the settlement agreement, IU Health and HealthNet each will pay approximately $5.1 million to the United States and $3.9 million to the State of Indiana.

“Helping to return millions of dollars in taxpayer funds to federal healthcare programs and the Indiana Medicaid Program is critically important to me and my office,” said U.S. Attorney Minkler. “Waste, fraud, and abuse can never be tolerated and tear at the fabric of first-class healthcare in this country.”

The Anti-Kickback Statute prohibits the knowing and willful payment of any remuneration to induce the referral of services or items that are paid for by a federal health care program, such as Medicaid. Claims submitted to federal health care programs in violation of the Anti-Kickback Statute are also false claims under the False Claims Act.

The United States alleged that from May 1, 2013 through August 30, 2016, IU Health provided HealthNet with continuous and substantial financial support in the form of an interest-free line of credit, the balance of which consistently exceeded $10 million. HealthNet was allegedly not expected to substantially repay the outstanding balance of this loan. The Government alleged that this financial arrangement was intended to induce HealthNet to refer its OB/GYN patients to IU Health’s Methodist Hospital. IU Health then billed Medicaid for patient hospital stays, tests, and procedures. There is no evidence of physical injury or harm to patients as a result of the allegations.

The settlement resolves a federal lawsuit filed under the whistleblower provisions of the False Claims Act, captioned United States of America and State of Indiana ex rel. Judith Robinson v. Indiana University Health, Inc. and HealthNet, Inc., Case No. 1:13-cv-2009-TWP-MJD (S.D. Ind.). The False Claims Act allows private individuals to bring a lawsuit on behalf of the United States for false claims and to share in any recovery.

“The payment of illegal remuneration to induce patient referrals interferes with health care providers’ independent judgment when they make referral decisions for their patients,” said Deputy Assistant Attorney General Joyce R. Branda for the Civil Division. “We will continue to pursue health care providers that engage in such conduct, which undermines public confidence in our health care system.”

This settlement was the result of a coordinated effort by the Department of Health and Human Services – Office of the Inspector General (“HHS-OIG”) and the State of Indiana Attorney General’s Office Medicaid Fraud Control Unit in coordination with the United States Attorney=s Office and the United States Department of Justice in Washington, D.C. The claims resolved by this settlement are allegations only and there has been no determination of liability.