Two laboratory marketers and their marketing companies, as well as five physicians, and certain affiliated entities have agreed to pay a total of $1,501,162 to resolve alleged False Claims Act violations arising from their involvement in laboratory kickback schemes. The parties have agreed to cooperate with the Justice Department’s investigations of other participants in the alleged schemes.
Marketer 1 and his company agreed to pay $400,000 to settle allegations of involvement in two illegal kickback schemes aimed at doctors for laboratory referrals. In the first scheme, Marketer 1 and his company allegedly collaborated with another marketing entity to pay kickbacks to a doctor in Houston in exchange for laboratory testing referrals. The kickbacks were disguised as consulting and medical director fees.
In the second scheme, they allegedly conspired with another marketing company to pay kickbacks to a doctor in Little Rock, Arkansas, also disguised as consulting fees for laboratory test referrals. Marketer 1 attempted to conceal his involvement by deleting related text messages upon receiving subpoenas from the Justice Department.
Marketer 2 and his company agreed to pay $320,000 for their involvement in paying kickbacks to the Houston physician and another physician in South Carolina. These actions were part of an ongoing investigation by the Justice Department, which previously settled related allegations with the clinical laboratories involved.
The settlements also resolve allegations that five physicians and related entities received kickbacks from purported management service organizations (MSOs) in exchange for making referrals to laboratories. The alleged kickbacks resulted in the submission of false or fraudulent laboratory testing claims to Medicare in violation of the False Claims Act. Under the terms of the settlements, the physicians will pay a combined total of $781,162.
“The kickbacks resulted in the submission of fraudulent laboratory testing claims to Medicare,” said US Attorney Philip R. Sellinger for the District of New Jersey. “Clinical laboratories, marketing companies, and healthcare practitioners are on notice that kickback arrangements in any form are not acceptable. No matter how they are named — as a ‘consulting fee,’ ‘commission’ or otherwise — or whether they are paid through intermediaries, kickbacks undermine the integrity of medical decision making and have no place in our healthcare system.”
Compliance Perspective
Issue
The Anti-Kickback Statute prohibits offering, paying, soliciting, or receiving remuneration to induce referrals of items or services covered by Medicare and other federally funded healthcare programs. Remuneration means anything of value and can include gifts, under-market rent, or payments that are above fair market value for the services provided. Claims that include items or services resulting from a violation are not payable and may constitute false or fraudulent claims under the False Claims Act.
Discussion Points
- Review policies and procedures for preventing and reporting a false claim or anti-kickback statute violation. Update your policies and procedures as needed.
- Train all staff on the False Claims Act and Anti-Kickback Statute and what can be considered a false claim or kickback. Include information on how to report concerns and suspected violations, and that prompt reporting is mandatory. Document that the training occurred and place in each employee’s education file.
- Periodically audit staff understanding to ensure that they are aware of what should be done if they suspect a false claim or illegal kickback has occurred, whether intentionally or unintentionally. Conduct audits of documentation and billing routinely to prevent and detect errors before they progress to a false claim.
*This news alert has been prepared by Med-Net Concepts, LLC for informational purposes only and is not intended to provide legal advice.*
