The federal government has joined a 2015 lawsuit filed by a whistleblower against a string of California skilled nursing homes. The lawsuit accuses the owner of several nursing homes of illegally participating in a kickback scheme that resulted in millions of dollars of fraudulently secured funds.

The case came to light in 2015 after a former executive of the Paksn company, Trilochan Singh, unveiled the company’s illegal practices. Singh was the company's former Vice President of Operations and Chief Operating Officer. Singh followed through with the lawsuit under the whistleblower provisions of the False Claims Act.

Named in the suit are Paksn, owner Prema Thekkek, and seven of the skilled nursing facilities which were owned and operated by the company Paksn Inc.

According to the complaint, Paksn Inc, under the direction of Prema Thekkek, was knowingly hiring doctors as directors in medical directorship agreements. The doctors purportedly performed administrative roles and were paid for those services, when in actuality, they were paid kickbacks for patient referrals. The kickbacks were paid as a way to entice physicians to refer patients to one of the seven skilled nursing facilities identified in the complaint.

As a result of these kickbacks, Paksn knowingly submitted thousands of fraudulent claims to federal healthcare programs, resulting in millions of dollars of reimbursement to these skilled nursing facilities.

According to the US government, Paksn’s dealings were in violation of the federal Anti-Kickback Statute. The Department of Justice explained in their press release that Paksn and the alleged associates “paid physicians in proportion to the number of expected referrals, and terminated physicians who did not refer enough patients.” The DOJ details, “On one occasion, a Paksn employee told Thekkek that two physicians were being hired because ‘they are promising at least 10 patients for $2000 per month.’ On another, 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, 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.’”

Acting Assistant Attorney General Brian M. Boynton of the Justice Department’s Civil Division shared in the statement from the DOJ, “Illegal financial arrangements with physicians can improperly influence the type and amount of health care that is provided to patients.” Boynton adds, “The department is committed to redressing the corrupting influence of kickbacks on the medical decision‑making of providers participating in federal health care programs.”

Acting U.S. Attorney Tracy L. Wilkison for the Central District of California shared these sentiments and explained, “The payment of kickbacks to physicians for referrals turns patients into commodities that can be traded.” Wilkison adds, “Profits should not dictate medical decisions, which is why it is illegal to pay for referrals that can cloud physicians’ medical judgment.”