[co-author: Alec Smith]

On March 29, 2023, the U.S. District Court for the Eastern District of Michigan granted the parties’ joint stipulation for dismissal in U.S. ex. rel. Godsholl v. Covenant Healthcare, following three settlements of the relator’s claims pursuant to the False Claims Act, 31 U.S.C. § 3729 (“FCA”), the Michigan Medicaid False Claim Act, MCL 400.601, et seq., the Federal Anti-Kickback Statute, 42 U.S.C. 1320a-7b(b) (“AKS”), and the Stark Act, 42 U.S.C. § 1395nn (“Stark”), alleging that a regional hospital system engaged in improper financial relationships with referring physicians. The settlement payments total more than $69 million.

In 2012, Dr. Stacy Godsholl, former Vice President of Covenant Healthcare and CEO of Covenant Medical Group (“Godsholl”), brought an action against Covenant Healthcare System and Covenant Medical Center (“Covenant”) alleging that her former employer rewarded known top referral sources with compensation, remuneration, and other favorable business arrangements inconsistent with fair market value. Covenant is one of the largest health systems in Michigan, with a hospital in Saginaw, office locations in Saginaw, Bay City, Midland, and Frankenmuth, and numerous outpatient facilities through the mid-Michigan region.

Covenant’s settlement, finalized in 2021, resulted in a payment to the United States of $67 million and to the State of Michigan of $1.8 million. This settlement remained under seal while the government continued its...

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