DOJ Settles Another Whistleblower-Originated False Claims Act Kickback Case

Posted June 23, 2026

By the Constantine Cannon Whistleblower Team

Last Wednesday (June 17), the Department of Justice (DOJ) announced that Arkansas-based Advanced Pathology Solutions (APS) — and its owners Kevin Hannah, Donell Burkett, and Daniel Hunter Pledger — agreed to pay $30 million to settle allegations they violated the False Claims Act and Anti-Kickback Statute by paying kickbacks to gastroenterology practices for pathology testing referrals.[1] The Government further alleged APS and its owners ordered medically unnecessary pathology testing services.

What Was the Nature of APS’ Alleged Kickback Violations?

The Anti‑Kickback Statute prohibits financial inducements to induce referrals for healthcare goods or services covered by Medicare/Medicaid or any of the other federal healthcare programs. It is designed to protect medical decision making from the influence or taint of improper financial incentives so the best interest of the patient remains paramount. The statute is extremely broad in its application, covering not just cash payments but virtually anything of value.

According to the Government, APS and its owners funneled kickbacks to its partnering gastroenterology practices through so-called “Lean Labs” that APS set up and managed at these practices nationwide. These were limited-purpose laboratories that enabled the practices to bill for preparing and staining biopsy specimen slides. In return, the gastroenterology practices allegedly agreed to exclusively refer patients to APS by shipping their slides to APS’ Arkansas lab for pathologist interpretation and review.

The Government also charged APS and its owners with billing (or causing the gastroenterology practices to bill) federal healthcare programs for unnecessary testing by directing Lean Lab personnel to automatically order “special stain” tests without confirming whether this additional testing was necessary. The Government further claimed that in many cases APS would order additional “confirmatory” testing on patient samples from the Lean Labs, knowing they were not medically necessary.

Finally, the settlement covers allegations that APS and CEO Kevin Hannah provided kickbacks to an individual named Richard Sorgnard in the form of volume-based commission payments for encouraging medical providers to order certain testing from APS for their patients. APS paid Sorgnard 4% of all payments APS collected for the testing he facilitated. In December 2025, Sorgnard and others settled False Claims Act charges related to this activity.[2]

The APS settlement also follows a $4.75 million settlement in February with Atlanta Gastroenterology Associates, one of APS’ former gastroenterology practice clients.[3] More details of the Government’s allegations against APS and its owners can be found in the settlement agreement between DOJ and the parties.[4]

Is Enforcing The Anti-Kickback Statute a DOJ Enforcement Priority?

The APS settlement is just the latest in a continuous stream of False Claims Act settlements involving improper healthcare kickbacks. Just last month, for example, Japan-based Takeda Pharmaceuticals agreed to pay roughly $13.7 million to settle DOJ False Claims Act charges of paying kickbacks to induce prescriptions of Takeda’s Trintellix antidepressant medication. The kickbacks there allegedly took the form of paid speaker opportunities, free “education programs,” and lavish meals.

Providing remuneration through paid speaking arrangements, free education programs, and travel and entertainment associated with these programs, is a common way to disguise kickbacks in the healthcare industry. Two of the largest False Claims Act settlements last year — as we reported in our listing of the Top 10 False Claims Act Recoveries in 2025 — involved these types of kickbacks.

In April 2025, California-based Gilead Sciences agreed to pay $202 million to settle False Claims Act charges of providing financial inducements to physicians to speak at or attend sham medical conferences to induce them to prescribe various Gilead HIV drugs. And in January 2025,

Pfizer subsidiary Biohaven Pharmaceutical agreed to pay roughly $60 million to settle similar charges of providing paid speaking opportunities and expensive meals to induce prescriptions of Biohaven’s migraine medication Nurtec.

While the APS matter involved a very different and seemingly more complex form of kickback, the Government made clear it fell within the strictures of the statute nonetheless. DOJ Civil Chief Brett Shumate was especially clear that “healthcare referrals must be based on the best decision for patients, not the influence of kickbacks,” and that the APS settlement “demonstrates [DOJ’s] commitment to hold accountable both corporations and individuals who profit from improper kickback arrangements.”

Several other Government officials weighed in with equally strong language about the dangers of illegal kickbacks and that enforcing the Anti-Kickback Statute remains a top enforcement priority. U.S. Attorney Jonathan Ross (EDAK) stated “engineering kickbacks to result in unnecessary medical testing . . . is unacceptable and once discovered . . . will result in lengthy investigation and review, and ultimately a significant settlement.”

U.S. Attorney Troy Rivetti (WDPA) joined in by underscoring how this settlement “is notice that such illegal conduct simply will not be tolerated.” And Acting HHS Deputy Inspector General stressed that “schemes like this erode trust in the health care system and divert resources away from those who truly need care, and that HHS “will move swiftly and aggressively with our law enforcement partners to uncover these abuses and hold every responsible party accountable.”

The vast majority of False Claims Act cases are originated by whistleblowers under the qui tam provisions of the statute, which authorize private parties to bring lawsuits on behalf of the Government against those that defraud the government. In return, successful whistleblowers can receive up to 30% of the Government’s recovery. Over the past thirty years, whistleblowers have received close to $10 billion in awards under the statute and helped the Government secure tens of billions more in recoveries.

Whistleblowers have been especially prevalent in originating kickback cases because of the difficulty of uncovering illegal kickbacks without firsthand exposure to the misconduct. The alleged APS matter is a good case in point having been originated by three different whistleblower lawsuits. While the Government did not provide any details on the whistleblowers, presumably they were employed at one of the offending companies involved in the alleged scheme. Without that front-row seat into the behavior, it would have been very difficult to identify the arrangements the parties orchestrated through their Lean Lab business model.

In our post on the Gilead blockbuster kickback settlement, Constantine Cannon whistleblower partner Gordon Schnell noted how “healthcare companies are taking to ever-more sophisticated schemes to disguise their improper financial inducements,” and that “the Government has no easy way to identify and take action against them” without the assistance of whistleblowers on the inside.

Schnell points to the APS settlement as the most recent example of the critical role of whistleblowers in this area. He further points to his firm’s experience representing whistleblowers reporting kickback violations. “The arrangements at issue are typically well concealed from public view,” Schnell says, “and extremely difficult for the Government to uncover without the help of company insiders.” He adds, “that is why whistleblowers continue to be central to the Government’s policing of illegal kickbacks.”

Constantine Cannon Has Substantial Experience Representing False Claims Act Whistleblowers Reporting Kickback Violations

Constantine Cannon has substantial experience representing kickback whistleblowers under the False Claims Act. Most recently, we represented the whistleblower who helped DOJ secure a $34 million settlement against dialysis giant DaVita for allegedly paying physicians for referring patients to DaVita’s dialysis centers. He received an award of roughly 18.5% of the Government’s recovery.

If you would like to learn more about this matter, Constantine Cannon’s long list of False Claims Act successes, or what it means to be a whistleblower more broadly, please do not hesitate to contact us. We will connect you with an experienced member of the Constantine Cannon whistleblower team for a free and confidential consultation.