Last year, U.S. Deputy Attorney General Sally Quillian Yates warned top healthcare executives they would be held personally accountable for false Medicare and Medicaid claims and illegal physician relationships. She was serious.
The agency in recent weeks has reached a pair of million-dollar settlements that makes it clear executives may have to dip into their own wallets if they're involved in their company's alleged wrongdoing. In one agreement, Ralph “Jay” Cox III, former CEO of Tuomey Healthcare System, personally paid $1 million to settle allegations over his involvement in the Sumter, S.C., health system's illegal compensation arrangements with physicians.
In another case, John Sorenson, board chairman of skilled-nursing facility company North American Health Care, shelled out $1 million for billing Medicare and Medicaid for medically unnecessary rehabilitation therapy services. North American's senior vice president of reimbursement analysis, Margaret Gelvezon, paid an additional $500,000 in the settlement for her alleged involvement.
The series of seven-figure personal settlements paired with Cox's exclusion from the healthcare industry for four years shows that the U.S. Justice Department plans to use every tool in its enforcement arsenal to curb False Claims Act, Stark law and anti-kickback statute violations. Government lawyers are increasingly focusing on personal accountability for bad conduct.
“I think it's a new day for C-suite executives and boards and for people down the line too,” said Kathleen McDermott, a partner at Morgan, Lewis & Bockius and former Justice Department healthcare fraud coordinator.