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Prime Healthcare Whistleblower Lawsuit Results in $37.5 Million Settlement

Prime Healthcare, its founder Dr. Prem Reddy and a cardiologist based in California settled a whistleblower lawsuit for a total of $37.5 million, which will be paid to the federal government and the state of California.

The plaintiff in the lawsuit was Phillips & Cohen LLP, which alleged the healthcare chain illegally paid kickbacks to the cardiologist in buying his surgical center and practice at a price significantly higher than their market value.

The result is the largest settlement of any such case alleging kickbacks to a single person from a hospital chain.

Case background

According to the complaint, Prime Healthcare and its affiliates purchased High Desert Heat Institute from Dr. Siva Arunasalam in 2015 at an amount three times the practice and facility’s total market value. The healthcare chain also paid Dr. Arunasalam a greater salary in exchange for patient referrals, and for shutting down his own independent practice and surgery center.

The lawsuit also alleges Prime and its affiliates routinely submitted false invoices to government healthcare plans so they could claim higher reimbursement rates for various medical devices.

Dr. Arunasalam allegedly knew the payments were for much higher than fair market value and agreed to the larger salary in exchange for patient referrals.

While doctors are allowed to sell their practices to other hospitals, the laws dictate the compensation must be fair market value. Paying inflated prices for these purchases is often a telltale sign of kickbacks. Kickbacks are a form of healthcare fraud that increases expenditures for everyone.

For more information about what to do if you become aware of healthcare fraud, contact an experienced whistleblower lawyer at Kardell Law Group.

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