ChristianaCare agrees to pay $47.1M to settle whistleblower lawsuit claiming kickbacks

ChristianaCare will pay $47.1 million to settle a nearly 7-year-old case that started after a whistleblower came forward alleging kickbacks and other violations at Delaware’s largest health system, attorneys representing the whistleblower said Thursday.

This is believed to be the largest False Claims Act settlement in Delaware history and the first in a series of cases that are likely to be brought against other hospitals across the nation. 

“This case involves a revolutionary legal theory,” said Dan Miller of Walden Macht & Haran — the law firm representing the whistleblower, Ronald Sherman. “To my knowledge, this is the first FCA 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 which operates under that model that led to this settlement should consider changing its practices immediately, or risk a whistleblower lawsuit.”

Shane Hoffman, ChristianaCare communications director, said the settlement does not include admission of liability.

He added that following a favorable judgement by the court, which dismissed a portion of the claims, they were pleased to settle the matter as they focus on meeting the needs of communities they serve.

“Our number one priority is to provide the best possible care to every patient we serve,” Hoffman said.

‘Kickback scheme’

The settlement aims to bring an end to charges of a “kickback scheme” registered by the health care systems’ former chief compliance officer, Ronald Sherman, who ended up filing fraud claims in a federal False Claims Act civil lawsuit in the U.S. District Court for Delaware. The False Claims Act allows an individual to file charges of taxpayer fraud on behalf of the government and then share in any resulting settlement.

Sherman filed the suit in 2017, three years after he was fired by ChristianaCare’s then-newly appointed chief executive, Janice Nevin. She remains as ChristianaCare’s president and CEO.

Sherman’s suit, which was unsealed more than a year after it was filed, charges that between 2010 and 2014 the hospital system engaged in a “kickback scheme,” by allowing doctors from a private practice called Neonatology Associates to bill insurances, primarily Medicaid, for care that had been provided by the hospital’s own staff.

In exchange, Christiana Care received lucrative patient referrals from those physicians, the suit claims.

The suit landed at a time when the hospital company was expanding its profitable maternity wing and vying to become a medical research hub in the Mid-Atlantic region. Its campus in Stanton houses the only high-risk delivering hospital in Delaware.

On Thursday

ChristianaCare Health Services has agreed to pay $42.5 million to the United States and the State of Delaware and $4.6 million to the attorneys representing Sherman to settle the case. Sherman’s share of the settlement is more than $12 million.

“It appeared to us that the provision of free services was partly the result of a nationwide scandal involving overworked medical residents,” Miller said.

In 2003, the Accreditation Council for Graduate Medical Education, which is the body responsible for accrediting physician training programs in the United States, adopted new rules that limit the number of hours hospitals could require medical residents to work, he said.

“To fill the gap left behind by residents, many hospitals hired mid-level providers such as nurse practitioners and physician assistants,” Miller said. “At ChristianaCare, we alleged that services performed by mid-level providers were billed for by private attending physicians who were in a position to make future referrals to the hospital.  

“Put differently, we alleged that ChristianaCare paid kickbacks to the private physicians in the form of free employees.“  

Hoffman said the use of advanced-practice clinicians (APC) to coordinate and provide continuity of care throughout their service lines is essential to enabling the level of high-quality, safe care that we provide.

“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,” he said.

“At ChristianaCare, we serve our patients with love and excellence,” he added. “As a nonprofit health care organization with a mission of service to our community, we are committed to providing high-quality, safe care to everyone we serve, especially for critically ill newborns in our [neonatal intensive care unit].”

Send tips or story ideas to Esteban Parra at (302) 324-2299 or eparra@delawareonline.com.

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