US Obtains $114M FCA Judgement in Kickbacks Case

On May 23, the US District Court in South Carolina issued judgment for the US for roughly $114M against three individuals, LaTonya Mallory, Floyd Dent III, and Robert Johnson, for violating the FCA by paying kickbacks to doctors in exchange for patient referrals. The defendants also caused two labs to bill Medicare, TRICARE, and Medicaid for medically unnecessary tests. The judgment follows a January jury verdict that determined liability.

Broadly speaking, the Anti-Kickback statute prohibits hospitals, physicians, pharmacies, nursing homes, durable medical equipment (DME) companies, pharmaceutical (drug) companies, medical device manufacturers, and other medical providers from paying or receiving kickbacks, remuneration, or anything of value in exchange for referrals of patients who will receive treatment paid for by government healthcare programs such as Medicare and Medicaid. The law seeks to prevent physicians proscribing medically unnecessary medications, or recommending unneeded tests. The Anti-Kickback Statute is also intended to ensure that a physician’s medical judgment is not compromised by financial incentives and is solely based on the best interests of the patient.

During the trial, the government presented evidence that the defendants paid doctors $10-$17 dollars for each patient they referred to two blood testing labs, HDL in Virginia and Singulex in California. The payments were disguised as processing and handling fees. The government also introduced evidence that the scheme resulted in physicians referring patients to HDL and Singulex for medically unnecessary tests, which were then billed to federal health care programs. Mallory was the CEO of HDL, and Johnson and Dent marketed the tests.

The jury found the defendants liable for causing over 38 thousand false claims, which resulted in roughly $17M in reimbursements. That figured was tripled, as the FCA requires. The US was also awarded $63M in penalties.

The issue was first brought to the government’s attention by four whistleblower through three lawsuits. The US intervened in these actions in August 2015, and consolidated them shortly after. The whistleblowers stand to be awarded 15%-25% of the recovery, but a specific figure has not been determined.

Tagged in: Anti-Kickback and Stark, FCA Federal, Healthcare Fraud, Lack of Medical Necessity, Whistleblower Case,