A case of kickbacks and destruction of records in the healthcare industry

False Claims Act violations are not taken lightly. In this case, Halifax Health settled for $85M.

False Claims Act violations are not taken lightly. In this case, Halifax Health settled for $85M.

The case involving Halifax Health, based in Daytona Beach, Florida, highlights a few legal issues and concerns that cause significant problems for many. The two main issues in this case involved physician kickbacks and the destruction of billing records of alleged Medicare fraud. This past May the federal magistrate judge ordered sanctions to punish Halifax Health for destroying patient files[i]. It was alleged, on the Medicare fraud side of this controversy, that the hospital was billing Medicare for short admissions of patients that were not medically necessary. We visited this issue in a past article about Medicare fraud and whistleblowers who help bring to light the bad acts of a few. For more information, read our article: False Claims Act lawsuits and the whistleblowers who share in recoveries.

Destroying evidence in a civil or criminal case can trigger cascading difficulties for litigants.

In this case involving Halifax Health, the court split the matter into two separate issues, the evidence destruction claims on one side, and the alleged illegal physician kickback contracts on the other.

The U.S. Code sets forth the federal law on destruction of evidence: “Whoever knowingly alters, destroys, mutilates, conceals, covers up, falsifies, or makes a false entry in any record, document, or tangible object with the intent to impede, obstruct, or influence the investigation or proper administration of any matter within the jurisdiction of any department or agency of the United States or any case filed under title 11, or in relation to or contemplation of any such matter or case, shall be fined under this title, imprisoned not more than 20 years, or both.[ii]

In addition to criminal liability for destruction of evidence, the judge may penalize the offending party during the trial by the use of sanctions. In this case, the judge ordered Halifax Health to pay the attorneys fees for the whistleblower who brought the bad deeds to light. According to reports, the attorneys fees exceed $100,000. The judge called the destruction of records “reprehensible.[iii]

False Claims Act violations are not taken lightly. In this case, Halifax Health settled for $85M.

A U.S. Attorney, A. Lee Bentley, said in a news release, “This settlement illustrates our firm commitment to pursue healthcare fraud…Medical service providers should be motivated, first and foremost, by what is best for their patients, not their pocketbooks.[iv]

The bad deeds leading to FCA violations included an alleged agreement to pay physicians more than the fair value of wages, and bonuses, that improperly included the value of prescription drugs and medical tests ordered by the six involved oncologists, that were then billed to Medicare when they were not allegedly medically necessary. This type of billing fraud often involves many instances of smaller takings, which add up to big money over time.

If you or someone you know has knowledge of the types of bad acts involved in this case, our law firm can help a whistleblower so they do not have to let the cat out of the bag alone.

ABOUT THE FIRM: The Law Firm of Michael V. Favia & Associates is a successful General Civil Practice dedicated to providing personalized service and high quality representation for clients. With offices conveniently located in the Chicago Loop, Northwest side and suburban meeting locations, you can schedule a discrete meeting with an attorney at your convenience and discretion. Feel free to “Like” the firm on Facebook and “Follow” the firm on Twitter and you will be kept in the loop about upcoming events and news in the firm’s practice areas including personal injury, medical malpractice, worker’s compensation, complex civil litigation and professional regulation and licensing.

[i] Becker’s Hospital Review, Judge Issues Sanctions Against Halifax for Destroying Files, by Ayla Ellison, May 29, 2014.

[ii] 18 U.S. Code §1519, Destruction, alteration, or falsification of records in Federal investigations and bankruptcy.

[iii] See Becker’s article in HNi above.

[iv] Becker’s Hospital Review, Halifax Settled FCA Allegations for $85M, Announces DOJ, by Ayla Ellison, Mar. 17, 2014.


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