Feds Accuse Martinez Nursing Home Owner, Chain In Kickback Scheme

MARTINEZ, CA — The U.S. Attorney's Office filed a complaint against a Vacaville company this week, accusing one of its owners and seven Bay Area skilled nursing facilities — including one in Martinez — of knowingly violating the federal Anti-Kickback Statute by systematically paying money to physicians to induce those doctors to make patient referrals.

The complaint against owner Prema Thekkek and the facilities owned by Thekkek and/or operated by Paksn Inc. was filed late Monday in United States District Court in Los Angeles, U.S. Department of Justice Spokesperson Thom Mrozek said in a news release.

Federal prosecutors allege Thekkek and/or Paksn entered into medical directorship agreements with certain doctors that purported to provide compensation for administrative services. In reality, prosecutors said, the agreements were vehicles for the payment of kickbacks to persuade the doctors to refer patients to the following skilled nursing facilities: Bay Point Healthcare Center, Gateway Care & Rehabilitation Center, Hayward Convalescent Hospital, Hilltop Care & Rehabilitation Center, all in Hayward; as well as the Martinez Convalescent Hospital in Martinez, Park Central Care & Rehabilitation Hospital in Fremont, and Yuba Skilled Nursing Center in Yuba City.

The Anti-Kickback Statute, however, prohibits offering or paying anything of value to encourage the referral of items or services covered by federal health care programs, Mrozek said.

Federal prosecutors specifically allege that Thekkek and/or Paksn: hired certain physicians who promised in advance to refer large numbers of patients to the facilities; paid physicians in proportion to the number of expected referrals; and terminated physicians who did not refer enough patients.

On one occasion, a Paksn employee purportedly told Thekkek that two physicians were being hired because "they are promising at least 10 patients for $2,000 per month."

On another, prosecutors said Thekkek complained that if Paksn’s employees did not pay medical directors promptly every month, "[t]hese doctors will not give us patients."

On a third occasion, according to prosecutors, a Paksn employee told Thekkek that because "lately there are no real referrals" from one of the medical directors, "I am planning to say goodbye to him."

"The payment of kickbacks to physicians for referrals turns patients into commodities that can be traded," said Acting U.S. Attorney Tracy L. Wilkison. "Profits should not dictate medical decisions, which is why it is illegal to pay for referrals that can cloud physicians’ medical judgment."

Illegal financial arrangements with physicians can improperly influence the type and amount of health care that is provided to patients, according to Acting Assistant U.S. Attorney General Brian Boynton of the Justice Department.

"The department is committed to redressing the corrupting influence of kickbacks on the medical decision-making of providers participating in federal health care programs," Boynton said.

This case was initially filed in December 2015 by Trilochan Singh, former vice president and COO of Paksn, under the whistleblower provisions of the False Claims Act.

The Act permits the United States to intervene and take over the lawsuit, as it has done here in part, Mrozek said.

"The United States’ intervention in this matter illustrates the government’s emphasis on combating health care fraud," Mrozek said. "One of the most powerful tools in this effort is the False Claims Act."