Medical lab shells out millions in kickback scheme settlement

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Berkeley HeartLab Inc. of Alameda, California may have violated the False Claims Act by paying kickbacks to physicians and patients in order to persuade them to use its lab for blood testing services as well as charging federally-funded programs for testing that was not actually necessary.

However, we’ll never really know, because the company’s owner, lab testing giant Quest Diagnostics Inc., has agreed to pay $6 million to settle the suit out of court.

“Companies that pay kickbacks to referring doctors corrupt those doctors’ independence, leaving patients vulnerable to expensive and unnecessary testing,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division.

Headquartered in Madison, New Jersey, Quest acquired Berkeley in 2011, and has since put an end to the criminally-motivated practice of paying doctors kickbacks disguised as “process and handling” fees and regularly waiving copayments owed by certain patients. The DOJ said in a statement that “these illegal practices resulted in medically unnecessary cardiovascular tests being charged to federal healthcare programs.”

The Anti-Kickback Statute was put in place to make sure that a doctor’s medical advice is based on what’s best for the patient and not compromised by financial incentives. Waiving patient copayments is also prohibited.

U.S. Attorney Beth Drake of the District of South Carolina explained that such fraud also hurts taxpayers by diverting federal funds away from important programs, such as health care and defense contracting.

The lawsuit was initially filed by private citizen Dr. Michael Mayes, who will receive an as-yet-unknown amount of the Quest settlement under the whistleblower provisions of the False Claims Act.

The DOJ has also announced settlements with two other laboratories – Health Diagnostics Laboratory Inc. of Richmond, Virginia, and Singulex Inc., of Alameda, California – for the same type of criminally-motivated behavior, and it’s continuing to pursue claims against remaining defendants Latonya Mallory, the former CEO of Health Diagnostics Laboratory Inc., and marketing company BlueWave Healthcare Consultants Inc. and its owners, Floyd Calhoun Dent III and Robert Bradford Johnson. 

This case emphasizes the power of the False Claims Act to uncover healthcare fraud. Anyone with a tip or a complaints regarding potential fraud, waste, abuse, and mismanagement, can be reported to the Department of Health and Human Services, at 800-HHS-TIPS (800-447-8477).

H/T: Department of Justice

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