Health Labs Agrees to Pay $48.5 Million to Settle Allegations of False Claims

In yet another case of healthcare fraud, Richmond, Virginia-based Health Diagnostics Laboratory and Alameda, California-based Singulex, Inc. have agreed to pay a combined $48.5 million to settle allegations of rampant False Claims Act violations.

The case involves two issues under the False Claims Act. First, the labs are alleged to have offered lucrative kickbacks and referral fees to doctors agreeing to send Medicare and Medicaid patients to the facilities for bloodwork. Second, allegations reveal that both facilities engaged in the processing and billing of medically unnecessary diagnostic testing, also in violation of the False Claims Act and applicable regulations set forth by CMS.

The settlement concludes three separate lawsuits in which the government opted to intervene. The lawsuits resolved near-identical allegations and were originally filed in South Carolina by two whistleblowers with original knowledge of the ongoing fraud.

According to the FBI’s press release, the amount of the qui tam award has not been disclosed. However, a whistleblower can receive up to 30 percent of a total recovery, which, in this case, could be over $14 million.

Details of the allegations against Diagnostic Laboratories

According to the FBI, both Health Diagnostics and Singulex offered physicians up to $17.00 per patient referral, and also agreed to waive co-pays and patient deductibles. Physicians were encouraged to refer as many Medicaid and Medicare enrollees as possible and were offered incentives to order as many blood tests for these patients as possible.

In addition, the FBI revealed that both companies conspired with a medical marketing firm in order to elicit additional physician referrals on behalf of the companies, offering kickbacks to both. As a result, Health Diagnostics, Singulex, and a third center known as Berkeley HeartLab, Inc. (which did not participate in the settlement) began referring patients for medically unnecessary diagnostic blood work, and subsequently billing the government (i.e., taxpayers) for these services.

As a result of the lawsuit, both Health Diagnostics and Singulex have agreed to enter into corporate integrity agreements. These agreements are often used following severe instances of intentional fraud to ensure defendants do not attempt to dabble in the practice in the future.

Separate lawsuits against the CEO of Singulex and the CEO of Quest Diagnostics (the owner of Berkley HeartLab) are ongoing; however, the government declined to intervene in those individual actions.

The U.S. Attorney’s Office said in a statement:

“The District of South Carolina has more than doubled its resources allocated to the pursuit of fraud brought to our attention by whistleblowers….Whistleblower actions are a critical tool for holding health care providers accountable for fraudulent and abusive practices not only in South Carolina but nationwide.”

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