Conway Lakes and Clear Choice: The Referrals Behind a Medical Director Agreement

The Conway Lakes and Clear Choice fraud case produced a $1.5 million settlement over alleged sham medical-director payments for Medicare and TRICARE referrals. The government alleged that a physician’s agreement served as the vehicle for buying rehabilitation business. If you work with physician contracts, approve payments or handle admissions, this case connects those parts of the business: what the physician was paid to do, where patients went and who billed for their health care.

Conway Lakes NC, LLC was the Orlando skilled nursing facility. Clear Choice Health Care, LLC was its management company. A former Conway Lakes employee brought the allegations in a qui tam case under the False Claims Act. The Department of Justice announced the settlements on January 28, 2019.

The Alleged Sham Medical Director Agreement

The government alleged that Conway Lakes, acting through Clear Choice, paid an orthopedic surgeon under a sham medical-director agreement to induce referrals. The patients had Medicare or TRICARE coverage, and Conway Lakes billed the United States for their rehabilitation services.

The alleged bargain was medical direction on paper and patient referrals in return. Medicare and TRICARE paid for the rehabilitation that followed. Taxpayers funded the care, while the alleged payments gave the surgeon a financial reason to send patients to Conway Lakes.

The Justice Department alleged that the financial arrangements violated the physician self-referral rules under the Stark Law and the Anti-Kickback Statute. Its False Claims Act case connected the alleged referral payments to the government’s bills for rehabilitation.

Who Agreed to Pay What?

Conway Lakes, Clear Choice and three individual participants together agreed to pay $1 million to the United States. The physician alone agreed to pay $500,000 under a separate settlement.

The participants in the collective payment were the facility, its management company, the former facility administrator, Clear Choice’s part-owner and president, and its part-owner and senior vice president. The physician had his own agreement, which also addressed an alleged similar kickback arrangement with a related home-health agency.

What Evidence Is Needed to Prove Fraud?

A medical-director referral case depends on the connection between promised work, actual services, payments and admissions. We examine those records with you to answer the question at the center of the case: what did the payment buy?

The facility is the certified Medicare participant, but the management company may control the business decisions behind its physician arrangements. We follow that connection between the company making the payments and the facility billing for the patients’ care.

Under Medicare’s skilled nursing facility consolidated billing system, the facility generally bills for the covered package of care. That puts the facility’s claims alongside the physician’s compensation when we examine an alleged referral purchase.

A separate complaint against The Ensign Group illustrates why the service records deserve attention. A former contracts manager alleged that physician medical-director and consulting payments induced referrals to Ensign nursing facilities. The complaint put the gap in timekeeping plainly:

The gap between promised work and recorded work is the point. An employee who handles contracts may see one side of that comparison. A billing employee or administrator may see the payments and admissions that complete it.

The Same Referral Bargain in Other Cases

Medical-director positions have appeared in other nursing-home kickback allegations because a paid position can carry a referral bargain. In the Hebrew Homes Health Network case, also known as Plaza Health Network, the government alleged that medical-director positions paid physicians for referrals while the stated duties largely went unperformed. That makes the comparison concrete: the job description, the actual services and the reason for paying belong beside one another.

The RehabCare referral settlement concerned an upfront payment and continuing compensation allegedly used to obtain therapy contracts at nursing homes. The whistleblower behind that case was Health Dimensions Rehabilitation, a competing therapy provider challenging the alleged arrangement for obtaining nursing-home contracts.

In the Good Shepherd Hospice case, the government alleged that medical directors were hired for their referral ability, particularly their nursing-home connections. That was a hospice case. Its connection to Conway Lakes is the alleged use of a paid physician role to bring business to the provider offering it.

The Related Home-Health Arrangement

The physician’s Conway Lakes settlement also resolved allegations of a similar kickback scheme with a related home-health agency. That gives the case another referral destination and another set of provider claims to examine.

Referral patterns also matter in the National Bureau of Economic Research’s 2026 working paper Medicare Home Health Fraud: How Much, Where, and Who?. The paper found that agencies it classified as fraudulent were more likely to rely on extremely high-volume referring physicians, exhibit unusually uniform care patterns and serve healthier-than-average patients.

The finding helps explain why we look beyond a physician’s contract to the business it brings in. The physician’s contract tells us what the arrangement promised. The referral and claims records show the business that followed.

The Former Employee’s Whistleblower Case

The Conway Lakes allegations began with a former employee’s whistleblower lawsuit. The Justice Department announced that the employee would receive a share of the settlement proceeds. Someone inside the facility brought the alleged relationship between physician payments and patient referrals to the government’s attention.

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers.

You Know What the Agreement Bought

If you saw physician payments tied to admissions, or worked with the contracts and claims behind them, speak with our whistleblower experts about what the agreement bought. We work beside you throughout the case and bring in whistleblower lawyers who know medical-director kickbacks to build your strongest healthcare whistleblower case.