Settlement Reached in IU Health Fraud Case

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INDIANAPOLIS -

Indiana University Health and HealthNet Inc. have reached an $18 million settlement with the Indiana Attorney General's Office and the U.S. Department of Justice. The DOJ says the settlement resolves a lawsuit alleging the violation of federal and state false claims laws through an illegal kickback scheme.

The lawsuit, filed in federal court in Indianapolis, alleged that IU Health gave HealthNet an interest-free line of credit with a balance of more than $10 million between May 1, 2013 and August 30, 2016. The arrangement was allegedly intended to induce HealthNet to refer OB/GYN patients to IU Health Methodist Hospital in downtown Indianapolis.

Indiana Attorney General Curtis Hill's office says any claims for services provided to patients referred by HealthNet to IU Health through this arrangement were false or fraudulent. Both state and federal officials say the conduct also violated the federal Anti-Kickback Statute, which prohibits "an entity from offering or paying money to induce another entity to refer a patient to a provider for products or services for which payment may be made in whole or in part under a federal health care program such as Medicaid."

HealthNet operates medical clinics throughout the state and Hill's office says IU Health OB/GYN practitioners have regularly provided services in those clinics. However, through the arrangement between the two entities, the practitioners allegedly directed patients to IU Health facilities for further treatment, instead of explaining the patients' options, as required by law.

"When public funds are designated to benefit those who are most vulnerable, companies receiving those funds have a special obligation to act in good faith," said Hill. "The arrangement between IU Health and HealthNet took advantage of Hoosiers on Medicaid by limiting their healthcare options exclusively to those within the IU Health Network, contriving a system that benefited only IU Health."

As a result of the settlement, IU Health and HealthNet will each pay $5.1 million to the United States and $3.9 million to the state of Indiana. The DOJ says $2.8 million of the federal share of the recovery will be awarded to Judith Robinson, a former employee of both IU Health Methodist Hospital and HealthNet who filed the lawsuit.

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