A Massachusetts diagnostic laboratory will pay the U.S. government $26.67 million to settle lawsuits brought by two whistleblowers alleging the company conspired with other companies to create complex kickback schemes that illegally paid doctors for lab testing referrals.

The settlement resolves allegations that Laboratory Boston Heart Diagnostics Corporation billed Medicare, Medicaid, and TRICARE for advanced lipid testing referred by health care providers incentivized by illegal kickbacks, the U.S. Department of Justice said.

The alleged scheme also involved Boston Heart coordinating with independent marketers for the hospitals involved in the scheme to set up companies that made the kickback payments to referring physicians disguised as investment returns. The marketing companies helped Boston Heart identify physician targets and engaged in sales pitches and other activities designed to boost the number of referring physicians.

The whistleblowers also alleged that Boston Heart paid processing and handling fees, waived patient co-payments and deductibles, and provided physician practices with in-office dietitians in exchange for physician referrals for laboratory testing.

The U.S. government alleged that Boston Health’s illegal schemes violated the federal Anti-Kickback statute and Stark Law. Boston Health engaged in the kickback schemes from 2015 to 2017, the government alleged.

“Paying kickbacks to doctors in exchange for referrals undermines the integrity of federal health care programs,” said Assistant Attorney General Jody Hunt of the DOJ’s Civil Division. “We will hold accountable those who enter into unlawful agreements that harm taxpayers, corrupt doctors’ medical judgment, and subject patients to expensive and unnecessary testing.”

The original complaints were filed separately by two whistleblowers under the False Claims Act, which allows individuals and other private parties to sue on behalf of the government in cases of suspected fraud against federal agencies and programs. Medicare and Medicaid are typically the biggest health care fraud targets.

Last year, the U.S. recovered $2.8 billion in settlements and judgments stemming from False Claims Act cases. Of that amount, $2.5 billion (nearly 90%) involved the health care industry, including drug and medical device manufacturers, managed care providers, hospitals, pharmacies, hospice organizations, laboratories and physicians.

Whistleblowers whose False Claims Act cases lead to a judgment or recovery receive 15-30% of the total amount recovered, depending on whether the government intervened. The whistleblowers who brought the case against Boston Health will share a reward of $4.36 million, about 27% of the total settlement.

If you are aware of fraud being committed against the federal or state governments, you could be rewarded for reporting the fraud. If you have any questions about whether you qualify as a whistleblower, contact a lawyer at Beasley Allen for a free and confidential evaluation of your claim. Lawyers on our whistleblower litigation team are Larry Golston, Lance Gould, Paul Evans, Leslie Pescia, Leon Hampton, Tyner Helms and Lauren Miles.

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