ChristianaCare pays $47M to resolve former compliance officer's kickback allegations

Wilmington, Delaware-based ChristianaCare has agreed to a $47.1 million settlement resolving illegal kickback allegations flagged by its former chief compliance officer, Ronald Sherman.

The system was alleged to have provided free services to several private surgical groups with which it worked, with the complaint specifically noting a neonatology group that managed all care and procedures in Christiana Hospital’s Neonatal Intensive Care Unit (NICU).

However, according to the complaint, the system’s employed hospitalists, residents and nurse practitioners “provided most of the professional care and procedures in the NICU, while Neonatology Associates billed for and was reimbursed for that/those care/procedures. Christiana provided these free services in exchange for referrals of patients to Christiana.”

“Put differently, we alleged that ChristianaCare paid kickbacks to the private physicians in the form of free employees,” Dan Miller, a head of Walden Macht & Haran’s whistleblower practice group and Sherman’s lead counsel, said in a release announcing the settlement.

The whistleblower case alleged similar referral arrangements between the system and heart surgeons, neurosurgeons, urologists and ear, nose and throat doctors. Billing for the care violated federal and state False Claims Acts, while the “payment in-kind renumeration to private physicians” was a violation of the Stark Law, plaintiffs alleged in their complaint.

Walden Macht & Haran said it believes that the $47.1 million ($12.1 million of which goes to Sherman) is the largest False Claims Act settlement in Delaware history. Sherman, who held the chief compliance officer role from 2007 to 2014, uncovered the arrangements when conducting internal investigations over several years, according to the suit.

The settlement does not include an admission of liability.

In an email statement, a ChristianaCare spokesperson told Fierce Healthcare that “following a favorable judgment by the court, which dismissed a portion of the claims, we are pleased to settle this matter as we focus forward on meeting the evolving health needs of the diverse communities we serve.

“The use of advanced-practice clinicians (APCs) to coordinate and provide continuity of care throughout our service lines is essential to enabling the level of high-quality, safe care that we provide,” the spokesperson said. “We will continue to ensure that our use of APCs to support the quality and safety of the care we provide to our patients is in accordance with all current guidance and requirements.”

ChristianaCare is a private nonprofit system with three hospitals, a freestanding emergency department and a network of primary care and outpatient services reaching beyond Delaware and into parts of Pennsylvania and Maryland. In 2022 it employed about 13,700 people, according to its website.

Miller said that the settlement paves a path for future suits against other hospitals with similar arrangements.

“This case involves a revolutionary legal theory,” Miller said in a release. “To my knowledge, this is the first [False Claims Act] settlement—ever—based on a hospital allegedly providing private physicians with free services in the form of hospital-employed nurse practitioners and physician assistants. Any other hospital in the country that operates under the model that led to this settlement should consider changing its practices immediately, or risk a whistleblower lawsuit.”