Indiana University Health (IU Health), the state’s largest health system, and HealthNet, an IU Health affiliate that serves low-income patients, have agreed to pay $18 million to resolve claims they engaged in a kickback scheme that involved IU Health paying for the referral of OB/GYN patients to IU Health’s Methodist Hospital.

Under the settlement agreement, IU Health and HealthNet each will pay approximately $5.1 million to the United States and $3.9 million to Indiana, the Department of Justice of announced recently.

The Anti-Kickback Statute prohibits, among other things, the knowing and willful payment of any remuneration to induce the referral of services or items that are paid for by a federal healthcare program, such as Medicaid. Claims submitted to federal healthcare programs in violation of the Anti-Kickback Statute also are false claims under the False Claims Act.

Federal prosecutors alleged that from May 1, 2013, through Aug. 30, 2016, IU Health provided HealthNet with an interest-free line of credit, the balance of which consistently exceeded $10 million. The government further alleged that HealthNet was not expected to repay a substantial portion of this loan and that this financial arrangement was intended to induce HealthNet to refer its OB/GYN patients to IU Health’s Methodist Hospital.

The settlement resolves a lawsuit filed in federal court in Indianapolis under the qui tam provisions of the False Claims Act, which permit private individuals to bring a lawsuit on behalf of the United States for false claims and to share in any recovery. The lawsuit was filed by Judith Robinson, MD, who formerly held several positions at both Methodist Hospital and HealthNet. Under the settlement, Robinson will receive approximately $2.8 million out of the federal share of the recovery.