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Analysis

Rialto Capital, Former Affiliate to Pay $3.6M to Settle Kickback Allegations

By John Commins  
   June 04, 2019

Rialto allegedly directed Clarksville, Indiana-based Kentuckiana Medical Center to offer personal loans to two referring doctors but never asked them to pay the loans back.

Rialto Capital Management LLC and its former affiliate RL BB-IN KRE LLC will pay $3.6 million to settle whistleblower allegations that the now-shuttered Kentuckiana Medical Center they owned and managed paid kickbacks for physician referrals, the Department of Justice said.

According to DOJ, Rialto directed Clarksville, Indiana-based KMC to proffer personal loans to two referring doctors but never asked them to pay the loans back, which investigators said "constituted a form of remuneration prohibited by both the Anti-Kickback Statute and the Stark Law."

RL BB owned and managed KMC for Rialto until November, 2018. The hospital closed in April.  

"This recovery sends the message that healthcare providers must comply with applicable state and federal laws when billing the United States Government for services, or they will face consequences,” U.S. Attorney for the Southern District of Indiana Josh Minkler said in a media release.

Rialto, through RL BB, bought a bankrupt KMC in 2013. Under the reorganization, KMC and Rialto offered partial ownership in the hospital to referring physicians. That tactic was rejected in the bankruptcy proceedings, DOJ said, so Rialto offered personal loans to referring physicians, which they never attempted to collect.

The settlement resolves a whistleblower lawsuit filed in federal court by Abdul Buridi, MD, who will get $612,000 from the settlement.        

 

“This recovery sends the message that healthcare providers must comply with applicable state and federal laws when billing the United States Government for services, or they will face consequences.”

John Commins is a content specialist and online news editor for HealthLeaders, a Simplify Compliance brand.


KEY TAKEAWAYS

Rialto, through RL BB, bought a bankrupt KMC in 2013. The hospital closed in April.

Under the reorganization, KMC and Rialto offered partial ownership in the hospital to referring physicians. That tactic was rejected in the bankruptcy proceedings.

Instead, Rialto offered personal loans to referring physicians, which the company never attempted to collect.


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