Two Medical Laboratories to Pay $48.5 Million to Settle False Claims Act Claims of Paying Kickbacks and Conducting Unnecessary Testing

Written April 10, 2015 by Robert Lu

On Thursday, April 9, 2015, the U.S. Department of Justice announced that Health Diagnostic Laboratory Inc. (HDL) and Singulex Inc. agreed to pay at least $47 million and $1.5 million, respectively, to settle civil allegations that they paid doctors for patient blood and billed Medicare for medically unnecessary testing. At the same time, the government also intervened in related lawsuits involving similar allegations against another laboratory, Berkeley HeartLab Inc.; a marketing company, BlueWave Healthcare Consultants Inc., and its owners, Floyd Calhoun Dent and J. Bradley Johnson; and former CEO Latonya Mallory of HDL.

As alleged in the lawsuits, HDL, Singulex and Berkeley induced physicians to refer patients to them for blood tests by paying them processing and handling fees of between $10 and $17 per referral and by routinely waiving patient co-pays and deductibles. In addition, HDL and Singulex allegedly conspired with BlueWave to offer these inducements on behalf of HDL and Singulex. As a result, physicians allegedly referred patients to HDL, Singulex and Berkeley for medically unnecessary tests, which were then billed to federal health care programs, including Medicare.

The lawsuits were filed by Dr. Michael Mayes, Scarlett Lutz, Kayla Webster and Chris Reidel under the qui tam, or whistleblower, provisions of the False Claims Act. Under the Act, private citizens can bring suit on behalf of the government for false claims and share in any recovery. The whistleblowers’ share of the settlements has yet to be determined.

For additional information about the False Claims Act, and the Firm’s resources and services for whistleblowers under the Act, please visit the Robbins Geller Rudman & Dowd LLP Whistleblower page.