Testing Lab and Owner/CEO Settle False Claims Act Case for $13.25 Million

RDx Bioscience Inc. (“RDx”), a clinical laboratory that operated in New Jersey, and its owner and CEO agreed to pay $13.25 million to settle a False Claims Act case alleging kickbacks and unnecessary testing schemes, according to a recent DOJ press release.  The press release also notes that RDx and its owner/CEO agreed to cooperate with the DOJ’s “investigations of, and litigation against, other participants in the alleged schemes” — so stay tuned as this settlement may not be the last we hear about this.

Alleged Kickbacks

The DOJ alleged five different types of kickback schemes that allegedly induced lab testing referrals to RDx:

1. Volume- and value-based commissions allegedly paid by RDx and its owner/CEO to marketers “to arrange for and recommend that healthcare providers order RDx laboratory tests.”
2. Corum Group LLC, an RDx marketer, “allegedly paid healthcare providers thousands of dollars in purported management services organization (MSO) payments, which were disguised as investment returns but actually were offered to induce the providers to order RDx laboratory tests.”
3. BeauMed Consultants LLC and Ralston Health Group Inc., two other RDx marketers, “allegedly paid thousands of dollars to healthcare providers that were disguised as consulting or medical director fees but were actually offered to induce orders, among other things, for RDx laboratory tests.”
4. Seaworthy Recovery Services Inc., another RDx marketer, “allegedly paid thousands of dollars in kickbacks to one or more principals of certain substance abuse recovery centers to induce their referrals to RDx for laboratory testing.”
5. RDx and its owner/CEO “allegedly paid specimen collection fees to the staff members of referring healthcare providers to induce those providers to order RDx laboratory testing.”

DOJ Press Release (emphasis added).

Alleged Testing That Was Not Reasonable and Necessary, and Not Covered

In addition to the kickback allegations, the DOJ also alleged that RDx and its owner/CEO engaged in three other types of alleged schemes relating to claims for lab testing services:

1. The alleged submission of claims for “tests that were not reasonable and necessary.”
2. The alleged submission of claims that were “not covered because they were identical orders of urine drug testing panels for all patients within a clinician’s practice without individualized decision-making.”
3. The alleged submission of claims that were “not covered because they were improperly duplicative of other claims for urine drug testing for the same date of service, the same patient, and the same drugs.”

DOJ Press Release (emphasis added).

According to the settlement agreement linked on the DOJ’s website, “RDx is no longer operating.”

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This False Claims Act litigation and the settlement reflect the DOJ’s continued focus on bringing FCA cases concerning the provision of healthcare services where the defendants allegedly submitted Medicare or Medicaid claims tainted by kickbacks or claims for unnecessary services.  Such fraudulent schemes not only can harm the government and taxpayers but also can harm patients or other consumers of the defendant’s products or services.  Whistleblowers are often in the best position to learn of such misconduct by receiving business emails; being present at meetings, teleconferences, or videoconferences where such misconduct is discussed; or receiving instructions from managers related to the misconduct.  Whistleblowers who bring such misconduct to light under the provisions of the False Claims Act may be eligible for an award of up to 30% of the government’s recovery.  This powerful incentive helps the government learn of fraudulent schemes and take action to remedy the misconduct.

If you would like more information on what it means to be a whistleblower or think you may have information relating to healthcare or pharmaceutical fraud, laboratory or testing fraud, fraud involving kickbacks, or any other kind of fraud or misconduct involving a government program, please feel free to contact us so we can connect you with a member of the Constantine Cannon whistleblower lawyer team for a free and confidential consultation.

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• Anti-Kickback Statute and Stark Law
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