Health care company settles for over $3 million in illegal kickback scheme

September 20, 2023 Rob Abruzzese

Attorney General Letitia James. Photo: Seth Wenig/AP.

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New York Attorney General Letitia James announced on Monday a settlement of more than $3.3 million with Dr. Klaus Peter Rentrop and the Gramercy Cardiac Diagnostic Group (Gramercy Cardiac) over an illegal kickback scheme that spanned more than a decade. The scheme involved the company paying physicians substantial sums in exchange for patient referrals to Gramercy Cardiac and affiliated cardiologists.

The illicit arrangement, which took place from January 2010 to December 2021, saw Dr. Rentrop and Gramercy Cardiac rent office spaces in New York City from physicians or their practice groups, often at rates exceeding fair market value.

This strategy aimed to incentivize these doctors to direct patients to Gramercy Cardiac-contracted cardiologists operating from the rented spaces. Subsequently, Gramercy Cardiac compensated many of these cardiologists based on the diagnostic tests or procedures undertaken on the referred patients, with larger sums for more lucrative procedures.

The Office of the Attorney General (OAG) identified these actions as breaches of both state and federal anti-kickback regulations and the New York False Claims Act.

The settlement ensures that the unlawfully obtained funds will be returned to Medicaid, allocating nearly $2 million to New York state. Additionally, in a separate deal with the U.S. Attorney’s Office for the Southern District of New York (USAO-SDNY), an extra $3.1 million will be paid to the federal government to address kickback accusations related to the Medicare program.

“New Yorkers should be able to trust that their doctors are working to heal them, not profit off of their suffering,” said Attorney General James. “Bribery and kickback schemes corrupt our health care system and make it harder for patients to receive the care that they need. My office will continue to enforce the law to ensure New Yorkers get the care they deserve and fraudsters who put profits over patients are held accountable.”

The OAG’s Medicaid Fraud Control Unit (MFCU) spearheaded the case, working in tandem with USAO-SDNY. From the over $3.3 million in claims tied to New York’s Medicaid program, the federal government will receive upwards of $1.3 million.

The settlements emerged from a collaborative effort involving OAG, USAO-SDNY, the U.S. Department of Justice’s Civil Division, and the Department of Health and Human Services Office of the Inspector General (HHS-OIG). Gratitude was extended to these entities by Attorney General James for their collaborative approach and support.