News
A Federal District Court in New Jersey has denied a home health association’s argument that it cannot be liable for kickback violations because it is a non-profit. The ruling came in an ongoing False Claims Act (FCA) lawsuit brought by Goldberg Kohn client David Freedman. Mr. Freedman, a former Director of Strategic Growth for BAYADA, is represented by Goldberg Kohn Litigation Principals David Morrison, Chip Mulaney, David Chizewer and Associate Daniel Mozley.
The Motion for Reconsideration was filed by the Visiting Nurse Association of Central Jersey Home Health Group, Inc. (Visiting Nurses) and Cape Visiting Nurse Association Inc. (Cape VNA) (collectively Visiting Nurse Movants). In his whistleblower complaint, Mr. Freedman alleged that the Visiting Nurse Movants violated the Federal False Claims Act and the Medicare and Medicaid Anti-Kickback Statute (AKS), as well as the New Jersey False Claims Act, by violating the Anti-Kickback Statute by way of illegal referrals.
Mr. Freedman alleged that the Visiting Nurse Movants had an arrangement whereby Visiting Nurses provided its co-defendant Cape Regional Medical Center, Inc. (Cape Regional) with 50 percent equity in a joint venture in exchange for home health and hospice referrals between June 2010 and May 2016, which resulted in unlawful kickbacks to Cape Regional. Cape VNA billed claims to Medicare based on those referrals. Visiting Nurses was responsible for all managerial tasks in Cape VNA, and Cape Regional’s only substantive responsibility in the partnership was to refer patients to Cape VNA.
In September 2025, the court denied Cape Regional’s Motion to Dismiss, and granted in part and denied in part the Visiting Nurse Movant’s Motion to Dismiss. In response, in October 2025, the Visiting Nurse Movants asked the court to reconsider its finding on only one AKS element - that of remuneration.
Under the AKS, the acting parties must knowingly and willfully solicit or receive remuneration in return for referring an individual to a person for the furnishing of any item or service for which payment may be made in whole or in part under a federal health care program. Notably, “remuneration” includes the transfer of items or services for free or for other than fair market value.
The Visiting Nurses Movants argued that the court should reconsider its previous remuneration finding because, “as a 501(c)(3) nonprofit corporation, it was impossible for Cape VNA to distribute profits to its members.” The court rejected that argument and concluded that whether Cape Regional’s alleged benefit from Cape VNA constituted “profit distributions” or “revenue,” or another type of monetary payment, was not a question that warranted reconsideration. If the court had accepted the defendants' argument, it could have carved out a massive loophole in the Anti-Kickback Statute — permitting non-profit healthcare organizations to receive illegal remuneration for patient referrals so long as they characterized the payments as something other than ‘profit distributions.’
Mr. Freedman is continuing to prosecute his qui tam whistleblower case against Cape Regional, the Visiting Nurse Movants and Cape May County, New Jersey, in the District of New Jersey. United States of America and the State of New Jersey ex rel. Freedman v. Cape Regional Medical Center, Inc., et. al. (No. 1:17-cv-06267-ESK-AMD).
