ChristianaCare has reserved $47 million for a pending whistleblower settlement
ChristianaCare said the settlement, which awaits federal and state government approvals, was not an admission of wrongdoing.
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ChristianaCare, Delaware’s largest health system, has reserved $47 million for a pending whistleblower settlement, the nonprofit disclosed in the audited financial statement it released Friday.
The tentative settlement involves alleged violations of the federal False Claims Act and anti-kickback laws at Christiana Hospital in Newark, Del. The nonprofit health system’s former chief compliance officer, Ronald Sherman, filed the lawsuit in 2017.
The lawsuit alleged that ChristianaCare provided free services of its employed doctors, residents, and nurse practitioners to a group of neonatology physicians in exchange for referrals to ChristianaCare’s neonatal intensive care unit.
Hospitals are not allowed to pay doctors for referrals under federal law.
ChristianaCare said it was unable to comment on the pending settlement. State and federal agencies have to approve any settlement before it can be finalized.
The relationship in question between ChristianaCare and Neonatology Associates began around 2010 and continued into 2014, when the Neonatology Associates physicians became ChristianaCare employees, according to the lawsuit filed in U.S. District Court for the District of Delaware.
The lawsuit alleges that ChristianaCare engaged in a “similar kickback scheme” in neurosurgery, cardiovascular surgery, urologic surgery, and in Christiana Hospital’s ear, nose, and throat practice.
The settlement is notable for the size of the financial reward, and because the federal government declined to participate in the lawsuit, said Dan Miller, Sherman’s lead attorney in the case.
“As far as we are aware, this groundbreaking settlement is by far the largest False Claims Act recovery of any kind in Delaware history,” said Miller, a partner in the Wilmington office of Walden Macht & Haran LLP.
ChristianaCare owns two hospitals in addition to its flagship in Newark. They are Wilmington Hospital in Wilmington and Union Hospital in Elkton, Md. The three hospitals have more than 1,200 beds.
In the year that ended June 30, the health system reported $2.9 billion in revenue. Its operating income for the year was $22.6 million, which was reduced by a $45 million reserve for the whistleblower settlement. ChristianaCare had previously reserved $2 million in connection with the case.