Bostwick Laboratories (Bostwick), a provider of anatomic and clinical pathology laboratory services has agreed to pay the U.S. government $6.05 million to resolve allegations that it violated the False Claims Act (FCA) by offering kickback incentives to physicians in exchange for referrals. This settlement relates to an earlier settlement, announced by the Department of Justice in August 2013, pursuant to which Bostwick agreed to pay the United States $503,668.00 to resolve allegations that the company made illegal payments to persuade certain physicians to use Bostwick’s laboratory testing services – some of which were not medically necessary. The qui tam whistleblower, Michael Daugherty, owner of LabMD, will receive an award for reporting the Medicare fraud and bringing the case under the FCA.

According to the lawsuit filed on behalf of the U.S. government in 2008 by Mr. Daugherty, Bostwick allegedly billed Medicare and Medicaid for tests and services in violation of the Anti-Kickback Statue. The lawsuit also claimed that Bostwick violated the FCA by illegally making incentive payments to physicians and coercing them to enroll their patients in a study called “Determination of the Accuracy of PCA3Plus Urine Assay for the Detection of Prostate Cancer,” sponsored by Bostwick. Based on the alleged agreement between Bostwick and the physicians, in order for participating physicians to receive the agreed monetary incentive offered by Bostwick, it was mandatory that they send urine samples for each patient enrolled in the program to Bostwick laboratories for analysis – samples that could have been processed by other competent laboratories. This type of practice, if proven, is illegal and is a clear violation of both the Anti-Kickback Statute and the FCA.

Provisions of the FCA make it unlawful for a person or company to defraud governmental programs, such as Medicare. The Stark Law and the Anti-Kickback Statue were enacted to prevent unlawful practices and to ensure that patients receive quality medical care based on a physician’s best judgment and not based on kickback incentives. The qui tam lawsuit filed by Mr. Daugherty alleged that Bostwick violated the Physician Self-Referral Statue (a.k.a. Stark Laws) and the Anti-Kickback Statue, which generally prohibit healthcare providers for receiving payments or gifts, or entering into certain types of financial arrangements, in exchange for referrals of patients who are covered by Medicare.

If you have information concerning a potential case involving Medicare fraud, do not hesitate to take action. It is possible that you might be able to bring your own qui tam lawsuit under the False Claims Act, acting as a whistleblower on behalf of the US government. Before filing your lawsuit, be sure to consult with an attorney familiar with the intricacies of the False Claims Act and qui tam lawsuits, as these attorneys are best equipped to help protect your rights and help you gain your share of any monetary reward from a potential settlement.