Kickback allegations against North American Health Care CEO 'plausibly supported,' court rules

Editor's Note: This article has been updated with comments from North American Healthcare Inc.

A lawsuit alleging that the CEO of North American Health Care Inc. personally oversaw a kickback scheme will continue, despite his motion to have the case dismissed, a federal court ruled last week.

The lawsuit, filed by a former NAHC facility administrator, claims that CEO John L. Sorenson ordered other nursing home administrators to pay physicians in exchange for referring Medicare beneficiaries to NAHC facilities. The whistleblower, John Orten, also alleges that Sorenson paid physicians to sign letters written by NAHC employees that defended the company against deficiencies found by Medicare inspectors.

Orten's choice to pursue the claims came after the federal government and three state governments chose not to participate in the lawsuit, a spokeswoman from NAHC wrote in a statement to McKnight's

Judge William H. Orrick of the U.S. District Court for the Northern District of California denied part of Sorenson's motion to have the lawsuit dismissed, ruling that the kickback allegations against Sorenson “plausibly supported” Orten's claims.

Orrick dismissed Orten's claim of Sorenson obtaining physician signatures in order to contest deficiencies and improve the company's Medicare star ratings, saying it didn't have enough of a connection to Medicare payments to qualify as a False Claims Act violation.

"In permitting this partial claim to proceed, the Court has not determined the facts against Sorensen; it has only concluded that the facts underlying Orten's accusations should be examined. North American and Sorensen welcome the opportunity to directly address Orten's allegations should a trial become necessary," a NAHC spokeswoman wrote in the statement. "North American Health Care, Inc. and Mr. Sorensen strongly deny these allegations. North American Health Care, Inc. and its Executive Chairman thank its business partners and communities for supporting it through this unmeritorious lawsuit."

California-based North American Health Care Inc. operates 36 facilities in the western United States.