Healthcare fraud generates the bulk of the Government’s recoveries under the False Claims Act (“FCA”). In fiscal year 2024, for example, $1.67 billion of the $2.9 billion in FCA recoveries obtained by the U.S. Department of Justice (“DOJ”) were from healthcare fraud cases.
 
Kickback and physician self-referral arrangements that violate the Anti-Kickback Statute (“AKS”)[1] and the Stark Law[2] have been a perinnerial focus for healthcare fraud enforcement. 2024 and 2025 are no exception. Here are four cases to highlight:
 
Community Health Network, a healthcare system based in Indianapolis, settled a whistleblower case alleging violations of the Stark Law for a total of $480 million.[3] The two settlements in this qui tam case resolved allegations that Community executives illegally recruited doctors, including cardiovascular specialists, breast surgeons, and neurosurgeons, to capture their “downstream referrals” to Community’s hospitals.
 
Specifically, Community allegedly offered salaries to those doctors that sometimes doubled what they earned on the open market to obtain those doctors’ hospital referrals. Community also allegedly gave false compensation figures for those doctors to a valuation firm so to obtain a favorable opinion that the salaries for those doctors were at “fair market value” and thus did not raise Stark Law concerns.
 
Teva Pharmaceuticals, a drug manufacturer based in Israel with its U.S. offices in Parsippany, New Jersey, paid $450 million to settle allegations that it violated the AKS by conspiring to waive the copay for its multiple scolerosis drug, Copaxone, for Medicare beneficairies while Teva was raising Copaxone’s price.
 
Specifically, Teva allegedly gave funds to two allegedly independent foundations with the goal of having those specific funds used to cover Copaxone co-pays for Medicare beneficairies. This induced Medicare beneficiaries to keep buying Copaxaone without having to pay out of pocket while Teva profited from higher Medicare reimbursements from repeatedly raising Copaxaone’s price.
 
Gilead Sciences, a drug manufacturer based in Foster City, California, paid $202 million to settle a whistleblower case alleging a kickback scheme to help Gilead obtain prescriptions for its HIV drugs.
 
According to factual admissions made as part of the settlement, Gilead paid many high-volume prescribers of its HIV drugs tens or hundreds of thousands of dollars in honoria to speak about those drugs. Gilead’s sales staff repeatedly invited the same high-prescribing doctors to attend the same HIV program over and over. In many cases, doctors repeatedly attended programs that covered the exact same topic in a short period of time.
 
Oak Street Health, a healthcare provider based in Chicago, paid $60 million to settle a whistleblower case alleging violations of the Anti-Kickback Statute. Oak Street allegedly paid third-party insurance agents to refer Medicare beneficiaries to Oak Street’s primary care clinics.

Specifically, when the insurance agents contacted beneficiaries to discuss Medicare Advantage, they also delivered Oak Street’s marketing messages and connected interested beneficiaries with Oak Street employees. In return, Oak Street allegedly paid the insurance agents $200 per referral.
 
These, of course, are just four examples of the myriad forms of illegal kickback arrangements and self-referral relationships that detract from patient care and raise healthcare costs. Kickback and self-referral schemes often are designed to disguise their illegal purpose, which make whistleblowers indispensable to exposing them.
 
[1] 42 U.S.C. § 1320a-7b.
[2] 42 U.S.C. § 1395nn.
[3] See Alysa Guffy, Community Health Network pays $135 million to Settle Remaining Claims on Kickback Scheme, IndyStar, (Jan. 3, 2025),  https://www.indystar.com/story/news/health/2025/01/03/community-health-network-pays-135-million-to-settle-remaiing-claims-on-kickbacks/77434222007/; Binghui Huang, Community Health Network Pays $345 million to Settle DOJ Lawsuit over Kickbacks, IndyStar (Dec. 19, 2023), https://www.indystar.com/story/news/health/2023/12/19/community-health-network-pays-345m-to-settle-doj-lawsuit-over-kickbacks/71971060007/.

This piece was written by Li Yu, Partner at Bernstein Litowitz Berger & Grossmann.