19 November 2024. Four whistleblowers put an end to an alleged healthcare fraud scheme involving billing federal healthcare programs for testing and medication for a rare genetic disorder. The United States Department of Justice and QOL Medical LLC and its co-owner and CEO have reached a $47 million settlement to resolve allegations of unlawful kickbacks in violation of the Anti-Kickback Statute and the False Claims Act. The four whistleblowers, former employees of QOL, will receive approximately 18.5% of the federal portion of the settlement.

Allegations Against QOL Medical

The allegations center around QOL Medical’s marketing practices for their FDA-approved drug, Sucraid, used to treat Congenital Sucrase-Isomaltase Deficiency (CSID). People affected by CSID tend to have difficulty digesting sugar. To promote Sucraid, QOL distributed free Carbon-13 breath test kits to healthcare providers, suggesting that these tests could “rule in or rule out” CSID—an assertion not supported by scientific evidence.

The company allegedly paid a laboratory to analyze these tests and shared the results, which included test outcomes and providers but not specific patient identities, with its sales force. The sales team was then instructed to target healthcare providers who received positive test results, aggressively linking these outcomes to the need for Sucraid prescriptions. The Sucraid prescriptions were “tainted” by QOL offering free Carbon-13 tests to providers and paying the lab for results.

The Role of the False Claims Act and Anti-Kickback Statute

This case highlights the efficacy of the False Claims Act in enabling whistleblowers to report fraudulent activity. The Act empowers private individuals to sue on behalf of the government and share in any financial recovery, providing a strong incentive for whistleblowers to come forward with information about fraud. Unlawful kickbacks in healthcare harm patients by distorting medical decision-making and prioritizing financial incentives over patient well-being. When providers accept or offer kickbacks, they may recommend treatments, services, or products that are unnecessary, inappropriate, or of lower quality, putting patients at risk of harm or substandard care. As the Acting U.S. Attorney for the District of Massachusetts said about this case, “Not all kickbacks come in the form of cash going into a doctor’s or a patient’s pocket. Here, the defendants relied on free breath tests and misleading sales tactics to drive patients to their product. This conduct unnecessarily drained money from the federal health care programs and improperly influenced treatment decisions by physicians and their patients.”

The Settlement and Its Implications

As part of the settlement, QOL entered into a Corporate Integrity Agreement with the Department of Health and Human Services Office of the Inspector General. The $47 million settlement resolves these allegations, with approximately $43.6 million addressing federal claims and $3.4 million allocated to State Medicaid programs. Importantly, the whistleblowers who initiated the lawsuit will receive about $8 million from the federal settlement, exemplifying the potential rewards for whistleblowers willing to expose healthcare fraud.