Rialto Capital Management and Current Owner of Indiana Hospital to Pay $3.6 Million to Resolve False

Rialto Capital Management and Current Owner of Indiana Hospital to Pay $3.6 Million to Resolve False Claims Act Allegations Arising From Kickbacks to Referring Physicians


The Department of Justice announced today that Rialto Capital Management LLC (Rialto) and its former affiliate RL BB-IN KRE LLC (RL BB) have agreed to pay $3.6 million to resolve allegations that Rialto and the Kentuckiana Medical Center (KMC), a Clarksville, Indiana-based hospital owned by RL BB, violated the Anti-Kickback Statute (AKS), the Stark Law, and the False Claims Act by engaging in illegal financial arrangements with two doctors who referred patients to KMC. Until November 2018, RL BB was an affiliate of Rialto, which oversaw management of the hospital.

“When doctors refer patients for tests and medical procedures, they must do so based on their own professional judgment and the medical needs of their patients, not personal financial benefits,” said Assistant Attorney General Jody Hunt for the Department of Justice’s Civil Division. “Illegal financial arrangements between health care providers undermine the integrity of our health care system, and we will continue to pursue those who engage in such conduct.”

The settlement resolves allegations that KMC, under the direction of Rialto, provided personal loans to two referring doctors and then repeatedly forbore from requiring repayment of those loans. The United States alleged that the hospital’s failure to collect on loans to key referral sources constituted a form of remuneration prohibited by both the AKS and the Stark Law. The AKS prohibits the provision of remuneration to induce the referral of services or items that are paid for by a federal health care program. The Stark Law restricts financial relationships that hospitals may enter into with physicians who refer patients to them. The False Claims Act prohibits the submission of claims to Medicare for items or services that are tainted by financial arrangements that violate the AKS or the Stark Law.

“The Anti-Kickback Statute, Stark Law, and False Claims Act were created to serve as tools for combating fraud, waste, and abuse in federally funded health care programs,” said U.S. Attorney for the Southern District of Indiana Josh Minkler. “This recovery sends the message that health care providers must comply with applicable state and federal laws when billing the United States Government for services, or they will face consequences.”

Read more: https://www.justice.gov/opa/pr/rialto-capital-management-and-current-owner-indiana-hospital-pay-36-million-resolve-false