COLUMBIA, SOUTH CAROLINA , APRIL 9, 2015 – A South Carolina doctor who had ethical concerns about blood testing labs paying physicians extra fees allegedly to get their business was one of the leading whistleblowers in a case against two cardiovascular labs that the government announced today has settled for $48.5 million.
The government joined whistleblower claims that Health Diagnostic Laboratory Inc. and Singulex Inc. had allegedly routinely paid doctors, physician groups and hospitals kickbacks between $10 and $17 masked as "process and handling fees" to induce them to order expensive blood tests, many of which were medically unnecessary.
HDL, of Richmond, Virginia, will pay $47 million plus more than $3 million in interest to the government over the next five years for a total of more than $50 million. Singulex Inc., a privately held lab company based in Alameda, California, will pay more than $1.5 million. The settlements cover charges made in a qui tam lawsuit brought by Dr. Michael Mayes and filed by whistleblower law firm Phillips & Cohen, as well as two other qui tam complaints.
"Dr. Mayes was quite concerned when he learned how much labs that were paying doctors process and handling fees were charging government healthcare programs for these specialized blood tests," said Peter Chatfield, a whistleblower attorney with Phillips & Cohen in Washington, DC. "It seemed to him, as alleged in his qui tam lawsuit, that the blood tests often were unnecessary, and labs were paying doctors unwarranted fees simply to get more test referrals."
Federal law prohibits kickbacks to doctors so that their decisions about medical treatment for their patients won’t be influenced by financial benefits.
The government also announced today that it has joined the kickback claims against two other companies named in Dr. Mayes’ qui tam complaint. Litigation will continue against:
The government’s investigation of allegations made in Dr. Mayes’ qui tam lawsuit and two other lawsuits prompted the Office of Inspector General for the US Health and Human Services Department to issue a fraud alert last year. OIG warned that "transfers of value from laboratories to physicians . . . present a substantial risk of fraud and abuse under the anti-kickback statute."
Medicare already pays physicians for the work involved in processing lab specimens as a component of what they pay doctors for office visits.
"Paying doctors is a very effective – but illegal – strategy for medical testing labs," attorney Chatfield said. "When doctors can make thousands of dollars each month just by sending blood samples to certain labs, that extra money is hard to resist."
The settlement amounts were limited to HDL’s and Singulex’s ability to pay, said Chatfield. The two settlement agreements made public today have contingency provisions that require each company to pay substantially more if its ability to pay improves in the next five years.
Phillips & Cohen filed the qui tam lawsuit against HDL, Singulex, Berkeley HeartLab and BlueWave on behalf of Dr. Mayes, an internist, in federal district court in South Carolina in 2011. The lawsuit alleged violations of the False Claims Act – for submitting claims for medically unnecessary services to government healthcare programs and claims that involved kickbacks – and the Stark Act, which prohibits referrals for medical services when there is a financial relationship between the doctor making the referral and the provider of the services.
Dr. Mayes and his attorneys thanked US Attorney Bill Nettles for the District of South Carolina, Assistant US Attorney James C. Leventis Jr. and Trial Attorney Elizabeth Strawn of the Department of Justice Civil Division for their efforts that resulted in today’s settlements and for their continued work to recover funds for taxpayers in the remaining cases.
Dr. Mayes also thanked his local counsel, Bill Coates, of Roe Cassidy Coates & Price P.A.
Case citation: United States ex rel. Mayes v. Berkeley HeartLab Inc., et al., Case No. 9:11-CV-01593-RMG (D.S.C.)