Kickbacks Prove That Sharing Is Not Always Caring

A $42 million settlement marks the end of a four-year investigation which alleged that PAMC Ltd. And Pacific Alliance Medical Center, Inc. together submitted false claims to both the federal government and the State of California and consequently used the reimbursements to violate the Anti-Kickback Statue and Stark Laws. The settlement will be split between the two plaintiffs, with $31.9 million being returned to the federal government and $10 million to the State of California.

The whistleblower suit, filed in June 2013, was brought forward by Paul Chan, who previously held employment as a manager at the Pacific Alliance Medical Center. According to Chan, who worked for the company for a brief ten-month period, Pacific Alliance regularly billed both Medicare and MediCal for services that were provided by physicians with whom the company had an inappropriate financial relationship; in order to do so, they would offer illegal kickbacks in return for referrals from these physicians – referrals that would have otherwise not been provided. Furthermore, Pacific Alliance filed these false claims with both government healthcare programs and used the illegally-obtained reimbursements to pay above-market rents for space in physicians’ offices and subsequently entered into “marketing relationships” with the associated firms.

The primary concern in a case such as this is the quality of care provided to patients – when the opportunity for financial gain enters into the equation, decisions that involve patient health tend to quickly lose priority in the eyes of the practitioners who willingly participate in these schemes. It is vital to any doctor-patient relationship and to healthcare systems as a whole that the standard for level of care is not compromised due to a potentially lucrative opportunity; from this idea, the Anti-Kickback Statute and Stark Law were conceived in an attempt to protect the sanctity of these care metrics.

The Anti-Kickback Statute, which this case directly violates, was passed in 1972 to safeguard both federal health care programs and their recipients from fraud and abuse; essentially, it bans the exchange (or proposition of exchange) of anything of value in an effort to induce the referral of federal health care program business. See 42 U.S.C. § 1320a-7b. 

Although the settlement did not involve any admission of guilt on behalf of Pacific Alliance, the Justice Department’s Assistant Attorney General Chad A. Readler has suggested that the recovery of these ill-gotten funds should serve as a lesson to others, in hopes it may deter providers from forging financial relationships that may taint the physicians’ medical judgment. Ultimately, these fraudulent practices often result in the deliberate endangerment of patients in a blind pursuit for personal and financial gain; whistleblowers such as Chan recognize the depravity of the situation and seek to remedy the issue by any means possible.  Under the qui tam provisions of the False Claims Act, which allows private citizens to bring forward information and file suit on the behalf of the United States, Chan was awarded over $9.2 million for his part in uncovering the fraudulent scheme.

Whistleblower Justice Network Can Help You

Whistleblower Justice Network partners with whistleblowers in a diligent attempt to expose any suspicious activity that jeopardizes the well-being of patients and defrauds any of the various government healthcare programs. We believe that those who prioritize the depth of their pockets to the quality of patient care should be swiftly brought to justice, and seek to work with those who agree.

If you have meaningful information regarding any type of healthcare fraud that you believe is in violation of the False Claims Act, Anti-Kickback Statute, or Stark Law, Whistleblower Justice Network can help. Working alongside world-class legal counsel, we will ensure you are protected to the fullest extent of the law and that you receive credit for the information you bring to the U.S. government. Partnering with whistleblowers is all we do. Visit us at, or call us at 844-WJN-4ALL.