The CEO and founder of a California testing laboratory together with the company have agreed to pay $3,043,484 to resolve allegations that they violated the False Claims Act by submitting false claims to Medicare for laboratory drug-testing services. The company is a medical technology company that manufactures diagnostic devices and provides laboratory testing, including for drugs and alcohol.
The federal government alleged that the facility improperly paid a medical clinic to induce it to refer orders for laboratory drug-testing to the company, and consequently received government reimbursement for those tests in violation of the federal Anti-Kickback Statute and the False Claims Act. Specifically, the United States alleged that the company paid kickbacks to a medical practice group to induce it to order laboratory testing for its patients enrolled in Medicare. For about two years, the company allegedly paid the medical practice group a per-specimen fee in exchange for referrals of urine samples from Medicare beneficiaries. The government further alleged that many of the samples that the medical practice group referred to for testing under this arrangement were not medically necessary, and therefore not lawfully eligible for Medicare reimbursement.
The False Claims Act allegations resolved were originally brought in a lawsuit filed by a former employee of the company under the qui tam, or whistleblower, provisions of the False Claims Act, which allow private citizens with knowledge of fraud against the government to bring suit on behalf of the government and to share in any recovery.
Compliance Perspective
Accepting kick-back payments from a laboratory testing company in exchange for ordering Medicare beneficiaries’ specimens to be tested by that facility and unnecessarily collecting specimens and submitting them for testing is a violation of the federal Anti-Kickback Statue. Knowingly submitting claims for laboratory services that are part of a kickback scheme is a violation of the False Claims Act, and may result in fines and exclusion from participation in federal reimbursement programs.
Discussion Points:
- Review policies and procedures regarding the federal Anti-Kickback Statute and the False Claims Act to ensure that protocols are in place to identify and prevent violations.
- Train staff regarding requirements of the federal Anti-Kickback Statute and the False Claims Act and how to report any reasonable suspicion of a violation to their supervisor or through the facility’s Hotline.
- Periodically audit to determine if any vendor has offered inducements in order to provide services to the facility. Monitor the checking of all vendors against the OIG List of Excluded Individuals and Entities or Debarred Contractors at the time contracts are negotiated and routinely thereafter.
FRAUD MODULE 3 – MASTERING LEGAL IMPLICATIONS AND ANTITRUST LAWS
