Hospital System and Doctors Pay Over $37 Million to Resolve State and Federal False Claims Allegations

  • California AG Rob Bonta and the U.S. Department of Justice reached a settlement with hospital system Prime Healthcare Services System, Prime Healthcare’s founder and chief executive officer, Dr. Prem Reddy, and related entities (collectively “Prime Healthcare”), and a Prime Healthcare interventional cardiologist, Dr. Siva Arunasalam, to resolve allegations of kickbacks and improper billing of state and federal health benefits programs in violation of the federal and California False Claims Acts.
  • According to the AG’s office, two complaints filed by whistleblowers alleged that Prime Healthcare paid kickbacks by intentionally overpaying to purchase Dr. Arunasalam’s practice and surgery center, and overcompensated Dr. Arunasalam in its employment agreement with him to induce him to refer patients to one of its hospitals. In addition, Prime Healthcare and Dr. Arunasalam allegedly used Dr. Arunasalam’s billing number to bill Medicare and Medi-Cal for services provided by a physician whose billing privileges had been revoked. Prime Healthcare also allegedly made false claims to Medi-Cal and two federal health benefits programs by inflating invoices for implantable medical devices.
  • Under the terms of the settlement, Prime Healthcare paid over $33.7 million, Dr. Reddy paid nearly $1.8 million, and Dr. Arunasalam will pay $2 million, and the United States will receive $35.24 million while California will receive $2.26 of the settlement proceeds.