This settlement resolves allegations that Covenant submitted false claims to Medicare by having financial relationships with five physicians that violated the Stark Law. The Stark Law prohibits a hospital from profiting from referrals of patients made by a physician with whom the hospital has an improper compensation arrangement. An arrangement is improper if a physician is paid above fair market value for their services and that compensation is not commercially reasonable. The Stark Law is intended to ensure that physicians’ medical judgments are not compromised by improper financial incentives and are based solely on the best interests of the patient.

The United States alleged that Covenant violated the Stark Law by paying commercially unreasonable compensation, far above fair market value, to five employed physicians who referred their patients to Covenant for treatment. These physicians were among the highest paid hospital-employed physicians not just in Iowa, but in the entire United States.

Tony West, Assistant Attorney General for the Department of Justice’s Civil Division, stated, “Health care providers must act in the best interests of their patients. The Justice Department will protect patients by pursuing hospitals that have improper financial relationships with physicians.”

“This payment is the largest ever related to claims of health care fraud in the Northern District of Iowa,” said U.S. Attorney Matt M. Dummermuth of the Northern District of Iowa. “We are actively working with our investigative partners to ensure Medicare funds are properly spent, and we will continue to aggressively pursue all types of fraud in order to protect federal health care dollars.”

The Justice Department’s Civil Division and the United States Attorney’s Office for the Northern District of Iowa jointly handled this case. The Office of the Inspector General, Department of Health and Human Services provided investigative assistance.

The United States alleges that Capmark made false statements in HUD applications to guarantee mortgage loans made to acquire the Canoga Care Center, a residential nursing home facility in Canoga Park, Calif., and the Hudson Valley Care Center, located in Ghent, N.Y. After accepting Capmark’s applications for mortgage insurance, HUD was forced to pay $25,895,701.21 when both the Canoga Care Center and Hudson Valley Care Center defaulted on their loans. Pursuant to the False Claims Act, the United States is seeking treble damages and penalties.

“Mortgage fraud is a top priority for this Administration, especially when public dollars are at stake,” said Tony West, Assistant Attorney General for the Justice Department’s Civil Division. “This complaint sends a clear message that we will aggressively pursue allegations of fraud on federal mortgage insurance programs, which are so vitally important to this economy.”

For a college to qualify to receive federal student aid, one requirement is that it meet applicable state licensing requirements. The United States alleged that Alta’s Texas colleges obtained the requisite state licenses by misrepresenting to the state licensing agency that they complied with state job-placement reporting requirements and that their interior design programs complied with requirements for a professional license.

“This settlement demonstrates the government’s commitment to enforcing the compliance standards required of colleges participating in the federal student aid program,” said Michael F. Hertz, Acting Assistant Attorney General of the Civil Division of the Department of Justice.

Alta Colleges, which is headquartered in Denver, has over 12,000 students at 19 campuses in California, Colorado, Georgia, Illinois, Texas and Virginia.

The civil settlement agreement released today resolves certain allegations that were originally filed in a federal lawsuit brought by whistleblowers under the federal False Claims Act. The False Claims Act permits private citizens to bring lawsuits on behalf of the United States and to share in any recovery. Under the settlement, the whistleblowers who initiated the lawsuit will receive $1.19 million.

This matter was investigated by the U.S. Department of Education. The settlement was the result of a coordinated effort among the Civil Division of the Department of Justice and the U.S. Attorney’s Office for the Northern District of Texas.