DOJ hands down fines for FCA, kickbacks, and failure to stop kickbacks.

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DOJ hands down fines for FCA, kickbacks, and failure to stop kickbacks.

In July of 2021, the Department of Justice announced that it entered into a settlement agreement with two Texas companies, Alliance Parent, Inc. (“Alliance”) and Anchor Holdings LP d/b/a Anchor Capital Partners (“Anchor”), for their violation of the False Claims Act after several qui tam actions were filed against the companies.  The case is notable given that the government’s theory for liability under the False Claims Act deviates from its historical positions because Anchor was not actively involved in the alleged misconduct. Rather, the government alleged that Anchor failed to stop past wrongdoings that it had knowledge of.

Alliance provides ambulatory and at-home electroencephalography (“EEG”) testing and related services for patients referred by health care providers. Anchor is a Texas-based investment firm. In June of 2017 Anchor became a minority shareholder in Alliance and held two seats on Alliance’s Board of Directors. Alliance also paid Anchor a monthly fee to manage the business.

In 2019, several individuals filed qui tam actions against Alliance and Anchor alleging that Alliance violated the False Claims Act. Among other things, these complaints alleged that Alliance persuaded non-neurologist doctors to order EEG testing from Alliance by offering the doctors free EEG test-interpretation reports. However, according to the government, offering these “free EEG test-interpretation reports,” allowed the non-neurologist doctors to bill government health care programs as if they had interpreted the tests themselves.

The complaints further alleged that this was a violation of the Anti-Kickback Statute (“AKS”) because it was, in effect, a bribe. The complaints also alleged that Alliance improperly billed clients by either using inflated billing codes or billing for work not performed. The complaints alleged that Alliance’s violations of the AKS and the fraudulent billing practices amounted to a misuse of federal health care funds.

Finally, the complaints allege that Anchor became aware of Alliance’s alleged wrongdoing through its due diligence during its purchase of a minority share of Alliance, but allowed Alliance to continue its bad acts after it purchased the minority share. Anchor’s knowledge of Alliance’s wrongdoing and failure to act was enough to make Anchor liable.

Alliance and Anchor settled the claims in the qui tam complaints. According to the settlement agreement, Alliance will pay $13.5 million to resolve the allegations that it submitted false claims to federal and state health care programs through the kickbacks it provided to doctors and its fraudulent billing practices. Anchor will pay $1.8 million for allowing Alliance to continue its false billing practices through its kickback scheme during the time period that Anchor managed Alliance.