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On August, 18, 2023, Watermark Retirement Communities, Inc., a senior housing operator that manages more than 65 retirement communities in 21 states, agreed to pay $4.25 million to settle a whistleblower lawsuit alleging that Watermark had illegally sold patient referrals to BAYADA Home Health Care, Inc. through the guise of a sale to BAYADA of two failing home health agencies for $1.9 million. The United States Department of Justice joined the whistleblower lawsuit, filed in New Jersey federal court by David Freedman, BAYADA's former Director of Strategic Growth.

According to that lawsuit, BAYADA and Watermark each violated the Federal False Claims Act and the Medicare and Medicaid Anti-Kickback Statute (also known as the AKS), by creating claims for payment by the federal government that were fraudulently tainted by illegal kickbacks. Specifically, the lawsuit alleges that BAYADA agreed to pay Watermark an exorbitant sum to enter an illegal quid pro quo referral arrangement under which Watermark referred its residents throughout the country to BAYADA, thereby tainting BAYADA's claims submitted to the government for reimbursement over a six-year period of time. In September 2021, BAYADA, a $1.5 billion home health care company, agreed to pay $17 million to settle the claims Mr. Freedman brought against it in the same whistleblower lawsuit.

Mr. Freedman is represented by David Chizewer and David Morrison of Goldberg Kohn Ltd. Mr. Freedman's lawsuit, which is still ongoing as to other defendants, was filed under the qui tam or whistleblower provisions of the False Claims Act, which encourages private citizens to report fraud against the government by allowing them to sue on behalf of the government and receive a share of any recovery. The False Claims Act also allows the government to join and prosecute such lawsuits, as the Department of Justice did in this case in connection with the claims against BAYADA and Watermark.

"Our client showed courage to come forward six years ago to ensure that health care providers focus their decisions only on the patient's best interests, and not because they are influenced by illegal kickbacks. Mr. Freedman had the fortitude and patience to allow the government to conduct its investigation into these two providers so that these settlements could be reached. We are proud to represent Mr. Freedman," said David Morrison, a principal in Goldberg Kohn's Litigation practice.

The government team was led by Department of Justice Trial Attorneys Daniel Meyler and Samson Asiyanbi, along with Assistant United States Attorney Jordann Conaboy. "We commend Daniel Meyler, Samson Asiyanbi and Jordann Conaboy for their commitment to justice and skill in bringing another piece of this litigation to conclusion," said David Chizewer, the chair of Goldberg Kohn's litigation department.

The lawsuit is captioned United States of America, State of New Jersey, ex rel. David Freedman v. BAYADA Home Health Care, al., No. 17‑cv-06267 (NLH) (D. N.J.).