Loosening Up Stark and Anti-Kickback Laws: What Would It Look Like?


Image result for Stark and Anti-Kickback Laws

The Department of Health and Human Services under the Trump administration has taken a deregulatory approach toward healthcare delivery. Its efforts on the payer side includes expanding the availability of individual health insurance policies that don’t conform to the rules of the Affordable Care Act, and more recently liberalizing the use of tax credits to purchase them.

However, the HHS has made one of its boldest proposals on the provider side. Over the summer, the Centers for Medicare & Medicaid Services issued a request for information (RFI) regarding potentially loosening up the Stark and anti-kickback laws.

Originally signed into law in 1972, the Anti-Kickback Statute barred any sort of renumeration to a provider to induce the referral of a patient. The Stark Law, enacted in 1990, bars doctors from referring Medicare or Medicaid patients to any ‘designated facility’ in which they have any form of a financial relationship. Both laws have been updated – and strengthened – numerous times in the intervening years. The HHS’ proposed changes would signal a shift away from how those laws are interpreted.

According to Mark Hardiman, partner with the Nelson Hardiman healthcare law firm in Los Angeles, the move represents a desire by HHS “to move all payments away from fee-for-service and make the providers at risk on both the upside and downside.”

Although the proportion of fee-for-service payments made to Medicare providers has shrunk in recent years, it still comprises the majority. A total of $392 billion in Medicare fee-for-service payments were made in 2017, according to the Kaiser Family Foundation, 56 percent of all payments made from the program. Although that’s down from 70 percent of all Medicare payments made a decade prior, the continuing aging of the Baby Boomer population and healthcare cost inflation is putting pressure on CMS and HHS to find ways to continue to pare back costs. Coordinated care initiatives such as accountable care organizations comprise just a small fraction of all Medicare payments, and many providers are balking about taking on too much downside financial risk when forming accountable care organizations.

 According to HHS, the intent is to make it easier for providers to implement value-based care initiatives. “Removing unnecessary government obstacles to care coordination is a key priority for this administration,” said HHS Deputy Secretary Eric Hargan of the rationale behind the regulatory review. “We need to change the healthcare system so that it puts value and results at the forefront of care, and coordinated care plays a vital role in this transformation.”

Nonetheless, the hospital sector has been generally supportive of regulatory changes. In testimony to a U.S. House Ways and Means subcommittee over the summer, Michael Lappin, chief integration officer at Advocate Aurora Health, observed that strict liability rules discourage value-based arrangements.

So, what would the healthcare delivery environment resemble with looser regulations governing both laws?

   According to Hardiman, the changes HHS is seeking to the regulations are far from sweeping.
“They are really on the margins, and they are not signaling a fundamental shift in the enforcement of the Stark and  Anti-Kickback Law,” he said. 

Why would there not be a major regulatory unraveling? Hardiman notes that doing so would create chaos in healthcare delivery. Moreover, qui tam(whistleblower) lawsuits in healthcare have become a major source of income for attorneys, and they would object to too much of an unwinding. Data from the non-profit watchdog organization Taxpayers Against Fraud bears that out: Of the more than $3.7 billion in False Claims Act settlements reached in 2017, $2.4 billion involved litigation involving healthcare enterprises. It was the eighth consecutive year that healthcare case settlements topped $2 billion. Hardiman also noted that more and more litigation is being settled for large sums even when the U.S. Justice Department declines to intervene in a case.

Hardiman believes that if the regs are loosened, they would likeliest be in the form of a “series of fraud and abuse waivers.” They would cover initiatives such as managed care ventures or ACOs, making it easier for hospitals and physicians to collaborate on care coordination, as well create models to more equitably share expenses and profits and encourage cross-referrals.

“You are going to see a much more comprehensive definition as to what types of risk-sharing arrangements will not be reviewed as renumeration under the kickback statute,” Hardiman said. “I wouldn’t be surprised to see safe harbors around Medicare Advantages, ACOs, and participants in other innovative risk-sharing arrangements.”

Individual physicians and medical groups may also have the opportunity to pay inducements to patients to lose weight or engage in another health-enhancing activity – something they are currently barred from doing under most circumstances.

“Everybody knows we’re heading toward a value-based coordinated care model,” Hardiman said. “And promoting and incentivizing it is still a risky business. You want at least some practical guideposts.” 


Trump Administration Invites Health Care Industry to Help Rewrite Ban on Kickbacks

The Trump administration has labored zealously to cut federal regulations, but its latest move has still astonished some experts on health care: It has asked for recommendations to relax rules that prohibit kickbacks and other payments intended to influence care for people on Medicare or Medicaid.

The goal is to open pathways for doctors and hospitals to work together to improve care and save money. The challenge will be to accomplish that without also increasing the risk of fraud.

With its request for advice, the administration has touched off a lobbying frenzy. Health care providers of all types are urging officials to waive or roll back the requirements of federal fraud and abuse laws so they can join forces and coordinate care, sharing cost reductions and profits in ways that would not otherwise be allowed.

From hundreds of letters sent to the government by health care executives and lobbyists in the last few weeks, some themes emerge: Federal laws prevent insurers from rewarding Medicare patients who lose weight or take medicines as prescribed. And they create legal risks for any arrangement in which a hospital pays a bonus to doctors for cutting costs or achieving clinical goals.

The existing rules are aimed at preventing improper influence over choices of doctors, hospitals and prescription drugs for Medicare and Medicaid beneficiaries. The two programs cover more than 100 million Americans and account for more than one-third of all health spending, so even small changes in law enforcement priorities can have big implications.

Federal health officials are reviewing the proposals for what they call a “regulatory sprint to coordinated care” even as the Justice Department and other law enforcement agencies crack down on health care fraud, continually exposing schemes to bilk government health programs.

“The administration is inviting companies in the health care industry to write a ‘get out of jail free card’ for themselves, which they can use if they are investigated or prosecuted,” said James J. Pepper, a lawyer outside Philadelphia who has represented many whistle-blowers in the industry.

Federal laws make it a crime to offer or pay any “remuneration” in return for the referral of Medicare or Medicaid patients, and they limit doctors’ ability to refer patients to medical businesses in which the doctors have a financial interest, a practice known as self-referral.

These laws “impose undue burdens on physicians and serve as obstacles to coordinated care,” said Dr. James L. Madara, the chief executive of the American Medical Association. The laws, he said, were enacted decades ago “in a fee-for-service world that paid for services on a piecemeal basis.”

Melinda R. Hatton, senior vice president and general counsel of the American Hospital Association, said the laws stifle “many innocuous or beneficial arrangements” that could provide patients with better care at lower cost.

Hospitals often say they want to reward doctors who meet certain goals for improving the health of patients, reducing the length of hospital stays and preventing readmissions. But federal courts have held that the anti-kickback statute can be violated if even one purpose of the remuneration is to induce referrals or generate business for the hospital.

The premise of the kickback and self-referral laws is that health care providers should make medical decisions based on the needs of patients, not on the financial interests of doctors or other providers.

The Trump administration is calling its effort a “regulatory sprint to coordinated care.”CreditSarah Silbiger/The New York Times.

Health care providers can be fined if they offer financial incentives to Medicare or Medicaid patients to use their services or products. Drug companies have been found to violate the law when they give kickbacks to pharmacies in return for recommending their drugs to patients. Hospitals can also be fined if they make payments to a doctor “as an inducement to reduce or limit services” provided to a Medicare or Medicaid beneficiary.

Doctors, hospitals and drug companies are urging the Trump administration to provide broad legal protection — a “safe harbor” — for arrangements that promote coordinated, “value-based care.” In soliciting advice, the Trump administration said it wanted to hear about the possible need for “a new exception to the physician self-referral law” and “exceptions to the definition of remuneration.”

Almost every week the Justice Department files another case against health care providers. Many of the cases were brought to the government’s attention by people who say they saw the bad behavior while working in the industry.

“Good providers can work within the existing rules,” said Joel M. Androphy, a Houston lawyer who has handled many health care fraud cases. “The only people I ever hear complaining are people who got caught cheating or are trying to take advantage of the system. It would be disgraceful to change the rules to appease the violators.”

But the laws are complex, and the stakes are high. A health care provider who violates the anti-kickback or self-referral law may face business-crippling fines under the False Claims Act and can be excluded from Medicare and Medicaid, a penalty tantamount to a professional death sentence for some providers.

Federal law generally prevents insurers and health care providers from offering free or discounted goods and services to Medicare and Medicaid patients if the gifts are likely to influence a patient’s choice of a particular provider. Hospital executives say the law creates potential problems when they want to offer social services, free meals, transportation vouchers or housing assistance to patients in the community.

Likewise, drug companies say they want to provide financial assistance to Medicare patients who cannot afford their share of the bill for expensive medicines.

AstraZeneca, the drug company, said that older Americans with drug coverage under Part D of Medicare “often face prohibitively high cost-sharing amounts for their medicines,” but that drug manufacturers cannot help them pay these costs. For this reason, it said, the government should provide legal protection for arrangements that link the cost of a drug to its value for patients.

Even as health care providers complain about the broad reach of the anti-kickback statute, the Justice Department is aggressively pursuing violations.

A Texas hospital administrator was convicted in October for his role in submitting false claims to Medicare for the treatment of people with severe mental illness. Evidence at the trial showed that he and others had paid kickbacks to “patient recruiters” who sent Medicare patients to the hospital.

The owner of a Florida pharmacy pleaded guilty last month for his role in a scheme to pay kickbacks to Medicare beneficiaries in exchange for their promise to fill prescriptions at his pharmacy.

The Justice Department in April accused Insys Therapeutics of paying kickbacks to induce doctors to prescribe its powerful opioid painkiller for their patients. The company said in August that it had reached an agreement in principle to settle the case by paying the government $150 million.

The line between patient assistance and marketing tactics is sometimes vague.

This month, the inspector general of the Department of Health and Human Services refused to approve a proposal by a drug company to give hospitals free vials of an expensive drug to treat a disorder that causes seizures in young children. The inspector general said this arrangement could encourage doctors to continue prescribing the drug for patients outside the hospital, driving up costs for consumers, Medicare, Medicaid and commercial insurance.




Part owner of proposed Chesapeake eye-surgery center faces allegations in kickback scheme, feds say


Proposed site for the Center for Visual Surgical Excellence in Chesapeake

A North Carolina-based physician and part owner of a proposed medical center in southern Chesapeake is facing allegations of involvement in a kickback scheme.

The U.S. Attorney’s Office in Minnesota is pursuing a civil action against Jitendra Swarup, an ophthalmologist at Albemarle Eye Center in Elizabeth City, N.C., a spokeswoman said Friday. She said the government’s complaint would be filed by a court-mandated mid-November deadline.

Swarup was among more than a dozen physicians and four companies listed as defendants in a 2015 complaint lodged by a “whistleblower” and former executive of Sightpath Medical. The lawsuit alleges physicians were bribed through travel, entertainment and “sham consultancy agreements” to use Sightpath products and services.

The company and its former CEO, James Tiffany, settled with the government and the whistleblower recently for $12 million, according to the U.S. Attorney’s Office in Minnesota and court documents. The 2015 complaint, which was originally filed in 2013, claimed, among other things, that Sightpath paid Swarup consulting fees to induce referrals.

“We intend to vigorously defend Dr. Swarup, and we believe he will be completely exonerated,” Swarup’s lawyer, Marc Raspanti, said Friday. Raspanti said no criminal charges have been filed, and there is no criminal investigation. The spokeswoman in Minnesota wouldn’t comment on the existence of a criminal investigation, but to date, there has not been a criminal charge issued, she said.

Raspanti, a Philadelphia-based attorney, said he is “cautiously optimistic” the government can be persuaded to “spend their time elsewhere.”

Swarup and Chesapeake ophthalmologist Paul Griffey want to build an outpatient surgery center on about 1.5 vacant acres off Carmichael Way in Edinburgh. Twelve surgeons are committed to what’s being called the Center for Visual Surgical Excellence, Griffey told council members last week. Services would include cataract, retinal and other surgeries, city planning documents say.

According to a certificate of public need issued for the center last month by the Virginia Department of Health, the capital costs of the project are $3.7 million, with financing costs of $1.4 million. It’s scheduled for completion by October 2018. A condition of the state’s certificate is that the center must provide “an appropriate level” of charity services, according to department documents.

City staff and the Planning Commission have recommended approval of a conditional-use permit. City Attorney Jan Proctor said Friday the City Council is aware of the civil lawsuit, but it is not a factor in the land-use issue.

“Dr. Swarup vigorously denies the allegations, and they provide no basis to deny the (permit) whether or not true,” Grady Palmer, the attorney for the project, wrote in an email to council members Sept. 1. The council will consider the proposal tonight.

Swarup, a Suffolk resident, told council members last week that he’s been practicing for 20 years in northeastern North Carolina, where Albemarle Eye Center has five offices, including two on the Outer Banks. He is licensed in Virginia and North Carolina, according to state medical board websites, and is affiliated with hospitals in both states.

Settlement documents say Sightpath Medical supplies medical facilities with products that ophthalmologists use for surgeries in ambulatory surgical centers and hospitals.

Federal payers, including Medicare, reimburse the facilities and the physicians, documents said. Sightpath offered and paid illegal remuneration to physicians to promote the use of its products and services, which resulted in the submission of false claims, the settlement documents said.

The 2015 complaint contends that Swarup began receiving $8,000 a month around 2002 as a consultant for Sightpath, but that he “does not perform commercially reasonable services for these payments.”

Instead, the payments were made to gain Swarup’s business in North Carolina and induce referrals, the documents say. Swarup sought these payments, which continued until at least 2008, as a “quid pro quo for arranging for hospital administrations to utilize Sightpath’s services and equipment,” court documents say.

Swarup was also a guest of a company executive on at least one “luxury” fishing trip to Budd’s Gunisao Lake Lodge in Manitoba, Canada, in 2006, according to the 2015 complaint.

Raspanti said Swarup was a consultant for Sightpath from 2002 or 2003 to late 2014, but Sightpath is still contracted with hospitals in which Swarup operates. He said most of those facilities had contracts with the medical service provider before Swarup came to North Carolina to practice.

Swarup made roughly $80,000 a year in consulting fees with Sightpath, Raspanti said, which included discussions on ways to improve products and services and the training of technicians who assisted Swarup with his procedures.

“The contract, as far as we’re concerned, was legal and honored for many years by both sides,” Raspanti said. It was neither unusual nor inappropriate, he said, and contracts like it exist in other medical disciplines.

There were “half a dozen trips” over the course of Swarup’s contract with Sightpath, Raspanti said. Swarup paid for some and contributed to others, and most were requested by Sightpath executives and were part of Swarup’s contractual obligation. Executives also visited Swarup at his North Carolina home, Raspanti said.

“Just because you see an allegation doesn’t mean it’s true,” Raspanti said, noting there have been “no allegations of inappropriate surgeries, no allegations of lack of medical necessity, no allegations of bad medical outcomes.” He said Swarup has not been excluded from Medicaid or Medicare or any private insurance company.

Raspanti, a health care lawyer for many years, said his client – the only local doctor named in the 2015 complaint – has been targeted because he is an active and prolific surgeon. Raspanti said he has told Swarup to do whatever he needs to do to run his practice, including his pursuit of a new venture.

“I have told him to move full speed ahead on it,” Raspanti said.


Medicare Advantage will have more enrollment, lower premiums in 2018


Dive Brief:

  •  The CMS says Medicare Advantage (MA) members will have more choices and lower premiums in 2018. Medicare open enrollment starts on Oct. 15.
  • The average MA monthly premium is expected to decrease by about 6% from $31.91 in 2017 to $30 in 2018. The CMS said 77% of MA enrollees who stay with their current plan will have the same or lower premiums in 2018.
  • MA’s enrollment is expected to increase by 9% to 20.4 million in 2018. The CMS expects that slightly more than one-third of Medicare enrollees will have an MA plan next year.

Dive Insight:

While the CMS has talked negatively about the Affordable Care Act (ACA), CMS Administrator Seema Verma is a big fan of MA. Verma (a candidate for HHS secretary in the wake of Tom Price’s departure) said MA and Medicare Part D “demonstrate what a strong and transparent health market can do — increase quality while lowering costs.”

Payers are enjoying positive financial numbers in the MA market. UnitedHealth Group said recently that it believes eventually half of all Medicare beneficiaries will have an MA plan. Payers are looking at the MA market for growth opportunities. In some cases, payers, such as Humana, are cutting back on ACA plans and investing more in MA.

Despite the CMS’ overall support of MA, the agency still sees one way to improve the program. The CMS wants MA payers to provide current and accurate information about their providers. The CMS found that 45% of MA provider directories had incorrect information, such as listing which providers are taking new patients, or providing the wrong phone numbers and addresses.

Currently, the CMS can only review MA plans’ provider networks when there is a triggering event. This can include when the insurance company starts in MA or extends its coverage, or the CMS receives a complaint about provider network issues. The CMS wants to have more oversight over provider network information, so that it can ensure the information is up to date.

While MA plans have been popular with the CMS, members and payers, there is a concern about a small number of payers monopolizing the market. The Kaiser Family Foundation said UnitedHealth controls nearly one-quarter of the MA market and is a major MA player in 42 states and the District of Columbia. KFF found UnitedHealth, Humana and Blue Cross Blue Shield affiliates make up 57% of MA enrollment and the top eight MA payers comprise three-quarters of the market.

Another issue for MA payers is that federal investigators are concerned about how much MA is paying insurers. The Department of Justice (DOJ) is investigating payments to insurance companies involved with MA.

Two of the bigger cases involve UnitedHealth. The payer is involved in two whistleblower lawsuits that allege MA overpaid the insurer by billions. The DOJ joined the lawsuits, which allege that UnitedHealth changed diagnosis codes to make patients seem sicker, which resulted in higher reimbursements to the insurer.

The CMS estimated that it overpaid $14.1 billion in 2013 to MA organizations. Medicare Advantage payers received about $160 billion in 2014. The CMS estimated about 9.5% of those payments were improper.

Whistleblowers: United Healthcare Hid Complaints About Medicare Advantage


Die Whistleblower


The suit, filed by United Healthcare sales agents accuses the giant insurer of keeping a “dual set of books” to hide serious complaints about its services

United Healthcare Services Inc., which runs the nation’s largest private Medicare Advantage insurance plan, concealed hundreds of complaints of enrollment fraud and other misconduct from federal officials as part of a scheme to collect bonus payments it didn’t deserve, a newly unsealed whistleblower lawsuit alleges.

The suit, filed by United Healthcare sales agents in Wisconsin, accuses the giant insurer of keeping a “dual set of books” to hide serious complaints about its services and of being “intentionally ineffective” at investigating misconduct by its sales staff. A federal judge unsealed the lawsuit, first filed in October 2016, on Tuesday.

The company knew of accusations that at least one sales agent forged signatures on enrollment forms and had been the subject of dozens of other misconduct complaints, according to the suit. In another case, a sales agent allegedly engaged in a “brazen kickback scheme” in which she promised iPads to people who agreed to sign up and stay with the health plan for six months, according to the suit.

Though it fired the female sales agent, United Healthcare concluded the kickback allegations against her were “inconclusive” and did not report the incident to the Centers for Medicare & Medicaid Services, according to the suit.

Asked for comment on the allegations in the suit, United Healthcare spokesman Matt Burns said: “We reject them.”

Medicare serves about 56 million people, both people with disabilities and those 65 and older. About 19 million have chosen to enroll in Medicare Advantage plans as an alternative to standard Medicare. United Healthcare is the nation’s biggest operator, covering about 3.6 million patients last year.

The whistleblowers accuse United Healthcare of hiding misconduct complaints from federal officials to avoid jeopardizing its high rankings on government quality scales. These rankings are used both as a marketing tool to entice members and as a way for the government to pay bonuses to high-quality plans.

Medicare paid United Healthcare $1.4 billion in bonuses in fiscal 2016 based upon their high quality ratings, compared with $564 million in 2015, according to the suit. CMS relies on the health plans to report problems and does not verify the accuracy of these reports before issuing any bonus payments.

The suit alleges the bonuses were “fraudulently obtained” because the company concealed the true extent of complaints. In March 2016, for instance, the company advised CMS only of 257 serious complaints, or about a third of the 771 actually logged, according to the suit.

The suit was filed by James Mlaker, of Milwaukee, a sales agent with the insurance plan in Wisconsin, and David Jurczyk, a resident of Waterford, Wis., a sales manager with the company.

The suit says Jurczyk had access to “dual” complaint databases, described as “the accurate one with a complete list of complaints and more details of the offenses and the fraudulent, truncated one provided to CMS.”

Jurczyk “has direct, personal knowledge of dozens of cases in Wisconsin alone in which customer complaints raising serious issues were routinely determined and falsely documented as either “inconclusive” or “unsubstantiated” by the company, according to the suit. Overall, about 84 percent of complaints alleging major infractions, such as forging signatures on enrollment forms, were determined to be inconclusive or unsubstantiated, according to the suit.

According to Mlaker, one sales agent faced little disciplinary action even after allegedly forging a customer’s signature on an enrollment form. The customer was “shocked” to learn that the agent had enrolled him because he had told the agent he was “not interested and did not want to enroll,” according to the complaint.

As a result, according to the suit, CMS officials never learned of these customer complaints.

The two men said that in early 2013 they began noticing that investigations of serious customer complaints that previously would have been completed “swiftly” instead “were drawn out; little actual inquiry was made, or even worse, known facts were ignored and discounted to falsify findings,” according to the suit.

Complaints also brought “much fewer and less serious corrective or disciplinary actions,” according to the suit. According to the suit, United Healthcare took steps to encourage any members with complaints to report them directly to the company rather than to complain to CMS.

The unsealing of the Wisconsin cases comes as United Healthcare and other Medicare Advantage plans are facing numerous cases brought under the Federal False Claims Act. At least a half-dozen of the whistleblower suits have surfaced since 2014.

The law allows private citizens to bring actions to recover damages on behalf of the federal government and retain a share. The Justice Department elected not to take over the Wisconsin case, which could limit the amount of money, if any, recovered. United Healthcare spokesman Burns said the company agreed with that decision.

In May, the Justice Department accused United Healthcare of overcharging the federal government by more than $1 billion by improperly jacking up risk scores over the course of a decade.

DOJ joins whistleblower lawsuit against UnitedHealth Group, WellMed


The Department of Justice has joined a whistleblower lawsuit against UnitedHealth Group and subsidiary WellMed Medical Management, claiming the insurer allegedly defrauded Medicare of hundreds of millions in risk adjustment payments.

UnitedHealth Group is accused of improperly inflating risk scores for Medicare Part C managed care and Part D prescription drug payments by claiming its members were treated for conditions they either did not have or were not treated for, according to the lawsuit.

The suit was originally brought in 2011 by a whistleblower through attorney Constantine Cannon in San Francisco.

The civil case names UnitedHealth Group, WellMed Medical Management, Health Net, Arcadian Management Services, Tufts Associated Health Plans, Aetna, Blue Cross and Blue Shield of Florida, Blue Cross Blue Shield of Michigan, Health, Inc., EmblemHealth, Inc., Managed Health dba Healthfirst New York, Humana, Medica Holding Company, WellCare Health Plans and MedAssurant.

All of the organizations are still named as defendants in the civil case, according to Jessica Moore, co-lead counsel on the case. The DOJ intervened only in the case against UnitedHealth Group and WellMed.


9 latest healthcare industry lawsuits, settlements


Image result for healthcare industry lawsuitsImage result for healthcare industry lawsuits

From a Florida hospital settling a whistle-blower lawsuit for $12 million to six pharmaceutical executives being charged in an alleged fentanyl racketeering scheme, here are the latest healthcare industry lawsuits and settlements making headlines.

Biggest healthcare frauds in 2016: Running list


Lazy Image


Appeals court reopens whistleblower’s case against Medicare Advantage orgs


In a newly issued opinion, a federal appeals court gives a whistleblower another chance to make his case that major health insurers inflated Medicare Advantage risk scores to collect greater government payments.

The Centers for Medicare & Medicaid Services pays Medicare Advantage organizations based on a risk score calculated by measuring a beneficiary’s overall health, with higher payments for sicker patients.

But whistleblower James Swoben claims that UnitedHealth, Aetna, WellPoint, Health Net and physician group HealthCare Partners gamed the system by conducting biased retrospective reviews of medical records already submitted to CMS. Such reviews would violate the False Claims Act.

Health Net tried to block employee whistleblowers, SEC says


The U.S. Securities and Exchange Commission seal can be seen at its headquarters in Washington, D.C.

For years, insurance provider Health Net Inc. used illegal severance agreements to try to keep departing employees from talking to state and federal officials about company violations, the U.S. Securities and Exchange Commission said Tuesday.

The Woodland Hills company agreed to pay a $340,000 penalty to settle the SEC’s allegations. It also agreed to contact former employees who had signed the severance agreements between Aug.12, 2011, and Oct. 22, 2015, and inform them that they were not prohibited from blowing the whistle about potential securities violations.

Health Net did not respond to requests for comment. The SEC said the company had agreed to the settlement without admitting or denying the commission’s findings.

The health insurer changed language in its severance agreements after the Dodd-Frank financial reform legislation was enacted in 2010. The law encourages whistleblowers to report possible securities law violations by providing financial awards and other incentives.

Under Health Net’s amended severance agreements, former employees waived their right to any monetary recovery that came from becoming a whistleblower. The SEC’s order does not address non-securities-related whistleblower lawsuits.

“Financial incentives in the form of whistleblower awards, as Congress recognized, are integral to promoting whistleblowing to the commission,” said Antonia Chion, associate director of the SEC’s enforcement division. “Health Net used its severance agreements with departing employees to strip away those financial incentives.”