A South Carolina laboratory marketer and his marketing company, as well as three physicians in North Carolina and their medical practices, have agreed to pay a total of $1,373,400 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.
The settlement, announced on April 29, 2024, resolves allegations that a marketer and his marketing company offered kickbacks to physicians on behalf of a laboratory in Anderson, South Carolina, and that physicians and their medical practices received kickbacks from the laboratory in return for laboratory referrals. The alleged kickbacks resulted in the submission of false or fraudulent laboratory testing claims to Medicare and TRICARE in violation of the False Claims Act.
The marketer and his marketing company agreed to pay $400,000 to resolve allegations that from January 2017 to January 2020, they, on behalf of the laboratory, offered to doctors in North Carolina and South Carolina thousands of dollars in kickbacks disguised as purported office space rental and phlebotomy payments to induce the doctors to order laboratory testing. In addition, the marketer and his marketing company allegedly received commissions from the laboratory as independent contractors based on the volume and/or value of the Medicare and TRICARE referrals that they arranged for and/or recommended, in violation of the Anti-Kickback Statute.
Physician 1 and his medical practice agreed to pay $205,000 to resolve allegations that, from May 2016 to December 2021, they received thousands of dollars in kickbacks in the form of purported office space rental and phlebotomy payments from the laboratory, in return for ordering testing. Physician 1 and his practice provided information that assisted the government’s investigation and received credit under the Department of Justice’s guidelines for taking cooperation into account in False Claims Act matters.
Physician 2 and his medical practice agreed to pay $385,000 to resolve allegations that, from July 2017 to November 2021, they received thousands of dollars in remuneration disguised as purported office space rental and phlebotomy payments from the laboratory in return for ordering testing.
Physician 3 and his medical practice agreed to pay $383,400 to resolve allegations that, from November 2016 to November 2021, they received thousands of dollars in kickbacks from the laboratory disguised as the purchase price for used laboratory equipment, office space rental, and phlebotomy payments, in return for ordering testing.
The settlement was the result of a coordinated effort between the Civil Division’s Commercial Litigation Branch, Fraud Section and the US Attorney’s Office for the District of South Carolina, with assistance from the Department of Health and Human Services Office of Inspector General (HHS-OIG), the Defense Criminal Investigative Service (DCIS), and the Federal Bureau of Investigation (FBI).
Compliance Perspective
Issue
The Anti-Kickback Statute prohibits offering, paying, soliciting, or receiving remuneration to induce referrals of items or services covered by Medicare, TRICARE, 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. The Anti-Kickback Statute is intended to ensure that medical providers’ judgments are not compromised by improper financial incentives and are instead based on the best interests of their patients. 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.*
