On October 18, 2022, the Department of Justice (DOJ) announced two settlements with CHC Holdings, LLC, an Oklahoma limited liability company doing business as Carter Healthcare (Carter), and two former senior corporate officers, resolving alleged violations of the federal False Claims Act (FCA), Anti-Kickback Statute (AKS), and Physician Self-Referral Law (commonly referred to as the “Stark Law”). One case settled claims that Carter had made improper payments to referring physicians in Oklahoma and Texas, while the other case settled claims that Carter had made false billing claims in Florida. Both matters were initiated by qui tam whistleblower complaints filed under the FCA. Carter agreed to pay more than $30 million to resolve the allegations.

In the Oklahoma and Texas case, whistleblowers alleged that Carter improperly paid its home health medical directors to induce referrals of Medicare and TRICARE patients in violation of the AKS and Stark Law, causing false claims to be submitted to federal health care programs. Carter agreed to pay $22.9 million and to enter into a corporate integrity agreement to resolve the allegations.

In the Florida case, whistleblowers alleged that Carter submitted false claims to federal health care programs for medically unnecessary therapy services and overbilled for therapy services by upcoding patients’ diagnoses in violation of the FCA. Carter and its principals collectively agreed to pay $7.175 million and to enter into a corporate integrity agreement to resolve the allegations.

Notably, the CEO and COO of Carter also agreed to be excluded from participating in all federal health care programs for five years and pay a portion of the settlement amount.

This matter emphasizes the exposure to whistleblower suits that health care organizations may have under the FCA arising from potential non-compliance and the DOJ’s continued interest in these suits, including against the officers of the entities.  While this was a civil lawsuit, the focus on individual accountability dovetails with the recent Monaco memo that again emphasized that the DOJ will focus on individual accountability.