Attorney General James Secures More Than $3 Million from Health Care Company for Illegal Kickback Scheme

NEW YORK – New York Attorney General Letitia James today announced a more than $3.3 million settlement with Dr. Klaus Peter Rentrop and his company, Gramercy Cardiac Diagnostic Group (Gramercy Cardiac), for engaging in an illegal kickback scheme in which they paid physicians and practices millions of dollars to induce them to refer patients to Gramercy Cardiac and to Gramercy Cardiac-contracted cardiologists. The recovered funds will be returned to Medicaid, with nearly $2 million going to New York state. As part of a separate agreement with the U.S. Attorney's Office for the Southern District of New York (USAO-SDNY), Dr. Rentrop and Gramercy Cardiac have agreed to pay an additional $3.1 million to the federal government to resolve kickback claims related to the Medicare program. 

“New Yorkers should be able to trust that their doctors are working to heal them, not profit off of their suffering,” said Attorney General James. “Bribery and kickback schemes corrupt our health care system and make it harder for patients to receive the care that they need. My office will continue to enforce the law to ensure New Yorkers get the care they deserve and fraudsters who put profits over patients are held accountable.”

The agreement resolves allegations of a kickback scheme that lasted more than 11 years, from January 2010 through December 2021. Dr. Rentrop and Gramercy Cardiac rented office space from physicians or their practice groups in New York City — often paying above fair market value — to induce these physicians to refer patients to Gramercy Cardiac-contracted cardiologists who used the rented office space and who regularly ordered diagnostic tests and procedures that were performed at Gramercy Cardiac. Dr. Rentrop and Gramercy Cardiac then paid many of these cardiologists a flat fee for each diagnostic test or procedure the referred patients underwent at Gramercy Cardiac, with larger fees charged for the tests or procedures for which Gramercy Cardiac received larger reimbursements. The Office of the Attorney General (OAG) found that these actions violated state and federal anti-kickback provisions and the New York False Claims Act.

The case was handled by OAG’s Medicaid Fraud Control Unit (MFCU), which worked closely with USAO-SDNY. Of the more than $3.3 million claims related to New York’s Medicaid program, approximately $2 million will go to the state of New York, and more than $1.3 million will go to the federal government. 

The investigation and settlements were the result of a coordinated effort among OAG, USAO-SDNY, the Civil Division of the United States Department of Justice (DOJ), and the Department of Health and Human Services Office of the Inspector General (HHS-OIG). Attorney General James thanks USAO-SDNY, DOJ, and HHS-OIG for their partnership and assistance.

This matter was handled for MFCU by Special Assistant Attorney General Hillary Gray Chapman of the Civil Enforcement Division, under the supervision of MFCU Civil Enforcement Division Chief Alee N. Scott. The underlying financial analysis was completed by Senior Auditor Investigator Songlin Mo with assistance from Regional Chief Auditor Stacey Millis. MFCU is led by Director Amy Held and Assistant Deputy Attorney General Paul J. Mahoney. MFCU is a part of the Division for Criminal Justice, which is led by Chief Deputy Attorney General José Maldonado and overseen by First Deputy Attorney General Jennifer Levy.

MFCU’s total funding for federal fiscal year (FY) 2023 is $65,717,936. Of that total, 75 percent, or $49,288,452, is awarded under a grant from the U.S. Department of Health and Human Services. The remaining 25 percent, totaling $16,429,484 for FY 2023, is funded by New York state. Through MFCU’s recoveries in law enforcement actions, it regularly returns more to the state than it receives in state funding.