ere’s the situation. You provide a service and that service is valuable–it might even save someone’s life. Luckily, that service can also make you a lot of money. Like millions of dollars a year. But you need people for your service. That service is a health care service, so let’s call those people patients.
You’re a problem solver, so you find upstream providers, let’s call them primary care physicians, who encounter a lot of potential patients. You offer to pay them to refer any potential customers who need your service. You can’t pay them outright–that would obviously be illegal– so you “lease” office space from them.
But it’s not that simple. For insurance to cover the service you’re providing, they need a specialist to recommend the service you’re providing. You’re resourceful, so you go out and find some specialists who can see those potential patients and refer some of those, but only the ones that really need it of course, the services that you offer. You pay those specialists too because you have to. Otherwise, those specialists may refer those potential patients to a different, competing service. Or, they may not refer them at all. The payment helps ensure that you get the business and that the “leases” you’re paying for are profitable.
Yeah, that’s illegal. Very much so. Federal prosecutors don’t like it much when you mix kick back payments with patient health.
From the Southern District of New York:
RENTROP and Gramercy Cardiac entered into office space rental agreements, often in excess of fair market value, with primary care and other physicians (or their medical practices) in order to induce these physicians to refer patients to GRAMERCY CARDIAC-contracted cardiologists who saw patients at the rented office space. These cardiologists then regularly ordered diagnostic tests and procedures that were performed at GRAMERCY CARDIAC locations and were paid a flat fee for each referral. GRAMERCY CARDIAC provides cardiac diagnostic imaging services, including PET and SPECT scans, and previously operated four offices in New York City.
Everyone wins? Sure, until an employee recognizes that this is illegal because it puts profits over people and blows the whistle on you. Then the whistleblower files a qui tam lawsuit, the government joins it, and takes you for everything you have.
Again, from the Southern District of New York:
Under the settlement approved today by U.S. District Judge Jesse M. Furman, RENTROP and GRAMERCY CARDIAC will pay $4,510,678 to the United States and have admitted and accepted responsibility for conduct alleged in the Complaint as further described below. RENTROP and GRAMERCY CARDIAC have also agreed to pay $1,989,362 to the State of New York to resolve the State’s claims, for a total recovery of $6.5 million. The settlement amount is based on the Office’s assessment of RENTROP’s and GRAMERCY CARDIAC’s ability to pay based on the financial information they provided.
In addition, RENTROP has agreed to relinquish his ownership and control over GRAMERCY CARDIAC by the end of the calendar year and will pay a portion of the proceeds of any sale of the practice to the United States. Further, RENTROP is indefinitely barred from working for any entity that bills federal healthcare programs.
Rentrop is paying everything he’s got (settlement is based on “ability to pay”) and is out of work. He can’t work “for any entity that bills a federal healthcare program.” Um, that’s the entire set of potential employers.
Meanwhile, the whistleblower will remain anonymous and collect over a million dollars for their trouble.