Prime Healthcare, doctors to pay $37.5 million to settle lawsuit alleging kickback scheme involving Desert Valley Hospital


Prime Healthcare, its CEO Dr. Prem Reddy and a cardiologist will pay $37.5 million to settle allegations that the company paid kickbacks to the cardiologist when it purchased a rival medical practice in exchange for patient referrals to the company’s Desert Valley Hospital in Victorville.

The settlement follows two whistleblower lawsuits, one which also claimed that Prime submitted fraudulent invoices to government healthcare programs with inflated prices for medical implants so the company could receive more money for reimbursement.

The law firm Phillips & Cohen — which represented one of the whistleblowers, former Prime employee Martin Mansukhani — said the settlement appeared to be the largest “brought against a hospital over kickbacks allegedly paid to a single physician.”

“Doctors are permitted to sell their practices to hospitals and other competitors, but the payment must be for fair market value,” Edward Arens, an attorney with Phillips & Cohen, said in a statement. “Throwing inflated sums of money at doctors for their medical practices and salaries as a hidden way to get patient referrals isn’t allowed.”

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