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Government Accuses Paksn of Kickback Scheme

— June 23, 2021

The DOJ pursues a False Claims Act case against skilled nursing facilities.

In a complaint filed this month in Los Angeles federal court, prosecutors have claimed that Paksn Inc, its co-owner Prema Thekkek and related entities, violated the federal Anti-Kickback Statute by entering into medical directorship agreements with physicians in exchange for referrals.  This led to false claims being submitted to government health insurance programs.  An original whistleblower complaint was originally filed in 2015 by a former Paksn executive, Trilochan Singh, who acted as the Vice President of Operations and Chief Operating Officer.  It focuses on seven facilities of Paksn, Inc., which was founded in 2002.

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

Government Accuses Paksn of Kickback Scheme
Photo by Kampus Production from Pexels

The DOJ has alleged that “the defendants explicitly tied the directors’ compensation to the volume of referrals and terminated them if they did not deliver, citing internal emails.”  It stated, “a Paksn employee said in an email in 2012 that he had told doctors that ‘if we don’t get patients, we are not going to pay them,’ and that ‘they are promising at least 10 patients for $2000 per month.’”  At one point, “Singh wrote he was ‘planning to say goodbye to a doctor who was not providing the desired referrals,’” according to the complaint.

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

The government has cracked down on kickback schemes in recent years, in part, to ensure that providers maintain a certain level of quality of patient care instead of relying solely on financial gains.  Research has shown that focusing on financial gains diminishes quality of care overall.  This is especially important with the ongoing coronavirus pandemic and opioid epidemic.

The complaint cites the False Claims Act (FCA), which holds that any person who “knowingly presents, or causes to be presented, a false or fraudulent claim for payment or approval; knowingly makes, uses, or causes to be made or used, a false record or statement material to a false or fraudulent claim” is “liable to the United States Government for a civil penalty of not less than $5,000 and not more than $10,000, as adjusted by the Federal Civil Penalties Inflation Adjustment Act of 1990, plus 3 times the amount of damages which the Government sustains.”

The case is United States of America et al v. Paksn Inc et al, U.S. District Court, Central District of California, No. 15-cv-09064.


United States Files Suit Against California Skilled Nursing Chain and its Owner for Allegedly Paying Illegal Kickbacks to Physicians

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U.S. accuses California nursing homes of kickback scheme

United States of America et al v. Paksn Inc et al, No. 15-cv-09064

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