April 4, 2022.  The United States Department of Justice chose to intervene in a qui tam lawsuit in which whistleblowers alleged two laboratory executives and one hospital executive, as well as co-conspirators, violated the False Claims Act and received kickbacks for patient referrals.  Through investigative efforts, the United States has recovered more than $30 million connected to the companies involved, including 25 False Claims Act settlements with physicians and others.  When the government decides to intervene in a False Claims Act case, the whistleblower or relator may still receive 15-20% of the government’s recovery.  The whistleblowers are a physician and other member of STF LLC.

According to the allegations, laboratory executives cooked up a kickback scheme with executives of small Texas hospitals, where the hospitals paid recruiters a portion of their laboratory profits, and the recruiters paid kickbacks from those profits to the physicians who referred patients to the laboratories.  True Health Diagnostics LLC (THD) and Boston Heart Diagnostics Corporation (BHD) allegedly worked with recruiters to set up management service organizations (MSOs) to disguise the kickbacks to referring physicians.  The allegations continue, stating the labs and hospital billed federal healthcare programs for these lab tests which “not only were tainted by improper inducements but, in many cases, also involved tests that were not reasonable and necessary.”

Putting profits before patients is the behavior that the Anti-Kickback Statute and the Stark Law prohibit.  The U.S. Department of Health and Human Services Office of Inspector General identifies the “five most important Federal fraud and abuse laws that apply to physicians are the False Claims Act (FCA), the Anti-Kickback Statute (AKS), the Physician Self-Referral Law (Stark law), the Exclusion Authorities, and the Civil Monetary Penalties Law (CMPL).”   The allegations list several ways in which the laboratory was involved in kickback schemes, including paying “monthly fees to a top-referring doctor, disguising the payments as consulting fees for participating in THD’s advisory board, even though no such board actually existed at THD.”

The labs also waived copays and deductibles which patients should have paid, removing patients from the system whereby they have an “interest in controlling […] the amounts billed to federal healthcare programs.”  As the U.S. Attorney for the Eastern District of Texas stated, “Laboratories, marketers and physicians cannot immunize their conduct by attempting to disguise the kickbacks as some sort of investment arrangement.”

The whistleblowers who reported the labs and hospital have uncovered a wide-ranging fraud scheme which harms taxpayers and patients alike. The Department of Justice needs whistleblowers to report fraud involving payments for patient referrals and unnecessary lab tests.