The U.S. Department of Justice recently announced a settlement with Patients Choice Laboratories (“PCL”), a diagnostic laboratory headquartered in Indianapolis, Indiana, under which PCL will pay over $9.6 million to resolve allegations that it violated the federal False Claims Act (FCA) and Anti-Kickback Statute (AKS). The government alleged that the lab knowingly submitted claims to Medicare for respiratory lab testing that was either medically unnecessary or obtained through kickbacks.
The case centered on a Marketing Services Agreement between PCL and a purported infection prevention company. Pursuant to this agreement, PCL would pay $5,000 per month to the infection prevention company in exchange for “marketing and management services.” No such services were actually rendered; rather, the marketing agreement was alleged to have been a sham document, used as a pretext for illegally paying the company for its referrals of laboratory tests to PCL.
Between December 1, 2020, and May 11, 2022, PCL paid the company almost $2 million in purported management fees that were actually in exchange for lab referrals. Those referrals enabled PCL to collect more than $6 million in reimbursements from Medicare.
During this same period, PCL contracted with a number of independent representatives to promote its laboratory tests to healthcare providers. The government alleged that PCL illegally paid these independent contractors a percentage of the revenue generated from the testing they facilitated and, in so doing, violated Medicare’s prohibition on paying compensation that is based on the volume or value of patient referrals.
In announcing its settlement with PCL, the government stated:
–Providing impermissible compensation to induce patient referrals that then lead to medically unnecessary diagnostic tests is simply unacceptable;
–Kickback arrangements that drive unnecessary testing waste taxpayer dollars and undermine the integrity of the U.S. healthcare system;
–Entities that submit false Medicare claims destroy public trust in federal healthcare programs and divert taxpayer-funded resources away from vulnerable citizens who truly need them; and
–Wasteful spending fueled by kickback arrangements undermines the public’s confidence in the healthcare system and depletes valuable resources that should be used to improve patient care.
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