April 10, 2015

DOJ Catch Of The Week — Health Diagnostics

By the C|C Whistleblower Lawyer Team

This week’s Department of Justice “catch of the week” goes to Virginia-based cardiovascular testing disease laboratory Health Diagnostics Laboratory Inc.  Yesterday, the company agreed to pay $47 million to resolve allegations it violated the False Claims Act by paying kickbacks to physicians in exchange for patient referrals and billing federal health care programs for medically unnecessary testing.  A second cardio testing lab, California-based Singulex Inc., agreed to settle similar charges by paying $1.5 million.  The government also intervened in whistleblower lawsuits making similar allegations against another laboratory, Berkeley HeartLab Inc.; a marketing company, BlueWave Healthcare Consultants Inc. and its owners; and former Health Diagnostics CEO Latonya Mallory.  See DOJ Press Release.

According to the government, Health Diagnostics, Singulex and Berkeley induced physicians to refer patients to them for blood tests by paying them processing and handling fees of between $10 and $17 per referral and by routinely waiving patient co-pays and deductibles.  In addition, Health Diagnostics and Singulex allegedly conspired with BlueWave to offer these inducements on behalf of the labs.  As a result, physicians allegedly referred patients to Health Diagnostics, Singulex and Berkeley for medically unnecessary tests, which were then billed to federal health care programs, including Medicare.

In announcing the settlement, the DOJ highlighted the purpose and importance of the Anti-Kickback Statute which “prohibits offering, paying, soliciting or receiving remuneration to induce referrals . . . to ensure that a physician’s medical judgment is not compromised by improper financial incentives and is instead based on the best interests of the patient.”  Those health care providers that violate these provisions “will be held accountable” stressed acting Assistant Attorney General Benjamin C. Mizer for the DOJ’s Civil Division.  Special Agent Derrick L. Jackson of the Health and Human Services Office of the Inspector General in Atlanta echoed this commitment “to ferret out alleged improper Medicare billings by health care companies that are looking to increase their profits at the expense of taxpayers.”

The allegations here were first raised in whistleblower lawsuits filed by Dr. Michael Mayes, Scarlett Lutz, Kayla Webster and Chris Reidel under the qui tam provisions of the False Claims Act.  The whistleblower award they will receive has yet to be determined.  US Attorney Bill Nettles of the District of South Carolina where one of the cases was filed said “whistleblower actions are a critical tool for holding health care providers accountable for fraudulent and abusive practices not only in South Carolina but nationwide.”  US Attorney Vincent H. Cohen Jr. of the District of Columbia likewise pointed to the government’s “determination to work with whistleblowers . . . to defend the integrity of the health care system from illegal agreements that hurt patients and taxpayers.”

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