Money for Nothing

The report analyzes the intersection of private equity ownership in the US healthcare sector and the False Claims Act (FCA). It argues that the private equity 'playbook'—prioritizing high returns over short horizons—often leads to fraudulent activities such as billing for medically unnecessary services or using unqualified staff. While private equity firms were historically shielded from FCA settlements, the report highlights a shift in the US Department of Justice's approach, particularly regarding the misuse of CARES Act funds. It provides data on at least 25 companies that paid over $570 million in settlements since 2013 and details case studies involving firms like Riordan, Lewis & Haden and H.I.G. Capital.

• Since 2013, at least 25 health care companies under private equity ownership have paid settlements exceeding $570 million for alleged False Claims Act (FCA) violations. The private equity firms that owned these companies currently hold interests in approximately 200 other health care companies, though the owners themselves were rarely included in the settlements.
• The US Department of Justice (DOJ) has indicated a strategic shift toward holding private equity firms directly liable for the actions of their portfolio companies, with a specific focus on the illegal collection of CARES Act funds during the COVID-19 pandemic.
• Private equity investment strategies—characterized by high debt and a drive for outsized returns—can create systemic risks in healthcare, including reduced staffing, reliance on unlicensed personnel, and pressure on physicians to provide unnecessary services to increase revenue.
• In a landmark 2019 case, the private equity firm Riordan, Lewis & Haden (RLH) and its company Diabetic Care Rx settled for $21.26 million. The DOJ alleged RLH financed a kickback scheme to generate referrals for expensive, medically unnecessary treatments to ensure a 'quick and dramatic payback' on its investment.
• H.I.G. Capital is facing ongoing litigation regarding its company South Bay Mental Health Center, which paid $4 million to settle allegations of billing MassHealth for services provided by unqualified and unsupervised staff. A US District Court ruled that H.I.G. could be liable because its principals were directly involved in the company's operations.
• Other notable FCA settlements involving private equity-owned firms include Apria Healthcare (owned by Blackstone), which paid $40.5 million for fraudulent billing of non-invasive ventilators, and Benevis (previously owned by Friedman Fleischer & Lowe), which paid $23.9 million for performing unnecessary dental procedures on children.

APA

O’Grady, E. (2021). Money for Nothing. Private Equity Stakeholder Project. https://pestakeholder.org/wp-content/uploads/2022/07/Private-Equity-False-Claims-Act-PESP-022221-1-1.pdf

Chicago

O’Grady, Eileen. Money for Nothing. Private Equity Stakeholder Project, 2021. https://pestakeholder.org/wp-content/uploads/2022/07/Private-Equity-False-Claims-Act-PESP-022221-1-1.pdf.

Wikipedia

{{cite report |last1=O’Grady |first1=Eileen |title=Money for Nothing |publisher=Private Equity Stakeholder Project |date=February 2021 |url=https://pestakeholder.org/wp-content/uploads/2022/07/Private-Equity-False-Claims-Act-PESP-022221-1-1.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{ogrady2021money, author = {O’Grady, Eileen}, title = {{Money for Nothing}}, institution = {Private Equity Stakeholder Project}, year = {2021}, month = feb, url = {https://pestakeholder.org/wp-content/uploads/2022/07/Private-Equity-False-Claims-Act-PESP-022221-1-1.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }