Whistleblower’s Lawsuit Leads to $6 Million Settlement for Alleged Kickbacks and Unnecessary Testing
Quest Diagnostics Inc. has agreed to pay $6 million to resolve a lawsuit that alleges Berkeley HeartLab Inc. violated the False Claims Act by paying kickbacks and conducting unnecessary testing.
The government alleges Berkeley HeartLab paid kickbacks to physicians and patients to induce the use of Berkeley for blood testing services and by charging for medically unnecessary tests. In 2011, Quest acquired Berkeley HeartLab and ended the conduct. However, when Berkeley HeartLab was allegedly committing the fraud, they induced physicians to refer patients to Berkeley HeartLab to conduct lab test by paying them kickbacks disguised as “process and handling” fees. The government also alleges that Berkeley HeartLab would pay kickbacks to patients by waving copayments when they were legally required to pay for their tests. Lastly, the government alleges that these illegal practices also resulted in unnecessary tests being charged to federal healthcare programs.
Under the Anti-Kickback Statute, knowing and willful payments to induce referrals of services or items that are paid for by a federal health care program like Medicaid is prohibited. The submission of false claims to a federal health care program is also a violation of the False Claims Act.
“This settlement is part of the government’s ongoing efforts to address conduct that allows medical decisions to be influenced by money rather than the best interests of patients,” said U.S. Attorney Channing D. Phillips of the District of Columbia. “Our office is pleased to defend the integrity of our healthcare system and to demand the return of ill-gotten gains.”
Dr. Michael Mayes originally filed the lawsuit as a whistleblower under the False Claims Act, but the government took over the case and two related actions in March 2015. The government is currently pursuing claims against Latonya Mallory, the former CEO of Health Diagnostics Laboratory Inc., and marketing company BlueWave Healthcare Consultants Inc. and its owners, Floyd Calhoun Dent III and Robert Bradford Johnson.
The whistleblowers award has yet to be determined. The False Claims Act also allows the whistleblower to receive a share of any funds recovered through the lawsuit. The False Claims Act is one of the most powerful tools to combat government contract fraud. Violators of the False Claims Act are liable for three times the dollar amount that the government is defrauded and civil penalties of $5,000 to $10,000 for each false claim. A qui tam plaintiff can receive between 15 and 30 percent of the total recovery from the defendant, whether through a favorable judgment or a settlement. The whistleblower must file a qui tam lawsuit to be eligible to recover money under the FCA. Merely informing the government about the violation will not qualify you for an award.
Related Links:
- DOJ Press Release: Quest Settlement
- False Claims Act Whistleblower Resources
