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Cayuga Medical Center Agrees to False Claims Act Settlement in Suit Brought by Whistleblower

Cayuga Medical Center, located in Ithica, New York, recently settled False Claims Act allegations that the medical center submitted false claims for payment under Medicare and Medicaid.  The government’s investigation was initiated and aided by Daniel S. Jorgenson, a physician practicing in the Ithica area who came forward as a whistleblower under the “qui tam” provision of the False Claims Act.

The settlement resolves allegations that Cayuga violated the Stark law, which prohibits physicians from referring patients to certain providers in which the physician has a financial interest.  The False Claims Act requires that all claims for payment under Medicare, Medicaid, and other federal health programs comply with all federal laws and regulations, including the Stark Law.  Because Cayuga’s recruiting agreements and payments to physicians violated the Stark Law, the organization was subject to civil liability under the False Claims Act.

Under the settlement, Cayuga will pay over $3.5 million to resolve pending False Claims Act allegations and engage in corrective action.  Under New York’s state False Claims Act, the state will be able to recover a share of $426,305 for false claims implicating state funds through the state’s Medicaid program.

The False Claims Act encourages potential whistleblowers to report fraud by allowing whistleblowers to file suits on behalf of the federal government.  Under the “qui tam” provisions of the False Claims Act, Dr. Jorgenson will receive a share of the governments recovery worth over $550,000 as a reward for his involvement in the government’s investigation.