When it comes to breaking up diagnostic lab kickback schemes, federal enforcers start with the lab that paid the kickbacks and then turn to the downstream physicians who accepted them. This was the pattern in the Millennium Labs case. And now it seems to be playing out in the other lab kickback mega-scandal, the one involving Health Diagnostic Laboratory, Inc. (HDL).
The Millennium case
The Millennium scam, the largest lab kickback scandal in history, featured free point-of-care testing cups given to physicians for urine drug test referrals. In 2015, Millennium settled by agreeing to pay $256 million. But the case was a long way from over as federal enforcers targeted the referring physicians and practices that accepted the free cups from Millennium. Since September 2017, more than a dozen physicians have been charged resulting in settlements of over $2 million.
The HDL case
The case against HDL and its lab business associate Singulex, Inc. began as a qui tam whistleblower lawsuit alleging payments of kickbacks disguised as processing fees of $10 to $17 per test to physicians in exchange for orders of medically unnecessary blood tests; then, by billing Medicare and TRICARE for tests provided under the arrangement, the labs violated the False Claims Act (FCA). In April 2015, the case settled with HDL agreeing to pay $47 million and Singulex $1.5 million. Both labs also entered into Corporate Integrity Agreements with the government.
Next on the hot seat were the corporate principles of each company. Rather than settle, HDL’s former CEO and two high-ranking marketing officials decided to fight it out in court. The strategy backfired when a federal jury found all three jointly and severally liable for kickbacks and false claims violations and handed down a $114.1 million verdict.
Physicians next phase
Now it looks like it’s the physicians’ turn to be held to account. On May 20, a pair of physicians and their Missouri practice entered into a $96,880 settlement agreement for accepting “process and handling” payments related to blood collection services from HDL in exchange for referring patients for testing. It’s expected there will be many more such settlements in the near future.
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