Darren J. LaMarca, United States Attorney for the Southern District of Mississippi, announced today that Clayton Deardorff (“Deardorff”) and his company, Stepping Stones Healthcare, LLC (“SSH”), have agreed to pay $589,000 to resolve allegations that they engaged in an illegal kickback arrangement with a Mississippi Critical Access Hospital (“CAH”) in violation of the False Claims Act (“FCA”).

Medicare designated CAHs are small rural hospitals limited to 25 beds that operate in medically underserved areas. Medicare reimburses most acute care hospitals under a fixed prospective payment system based on a patient’s diagnosis or treatment. However, to encourage hospital coverage in rural, underserved areas, Medicare exempts CAHs from this fixed prospective payment system and instead reimburses 101% of actual allowable costs of providing Medicare beneficiaries with outpatient, inpatient, laboratory, ambulance, and post-acute care services.

This settlement resolves allegations that were brought in a lawsuit filed under the qui tam whistleblower provisions of the FCA, 31 U.S.C. § 3730(b), by Mitchell Monsour and Stephen Vaughan. The FCA permits private parties to sue on behalf of the government for false claims and to receive a share of any recovery. The FCA permits relators, like Monsour and Vaughan, to continue with the FCA litigation on behalf of the government as they did here after the United States filed a notice of non-intervention. In this case, the United States...

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