Quest Diagnostics has agreed to pay $6 million to resolve a lawsuit brought by the United States government that alleged that Berkeley Heartlab—a Quest subsidiary—paid kickbacks to physicians and patients to encourage the use of their services, and charged for medically unnecessary tests.
Quest, a clinical laboratory service provider, acquired Berkeley in 2011 and had ended the practice in question. While Quest is accountable for the lab’s conduct, the settlement does not include any admission of wrongdoing.
According to the government’s complaint, Berkeley violated the False Claims Act by paying kickbacks to referring physicians disguised as “process and handling” fees. The complaint also alleged that Berkeley paid kickbacks to patients by routinely waiving copayments owed by certain patients who were legally required to pay for part of their tests. Allegedly, Berkeley paid the kickbacks to induce both the physicians and patients who received them to choose Berkeley over other laboratories. The government’s complaint further alleged that these illegal practices resulted in medically unnecessary cardiovascular tests being charged to federal healthcare programs.
“We rely on doctors to provide honest, independent recommendations regarding clinical testing,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division in a statement from the Department of Justice (DOJ). “Companies that pay kickbacks to referring doctors corrupt those doctors’ independence, leaving patients vulnerable to expensive and unnecessary testing.”
The Anti-Kickback Statute prohibits offering, paying, soliciting or receiving remuneration to induce referrals of items or services covered by federally funded programs, according to the DOJ. The Anti-Kickback Statute is intended to ensure that a physician’s medical judgment is not compromised by improper financial incentives and is instead based on the best interests of the patient. The Anti-Kickback Statute also prohibits routinely waiving patient copayments to ensure that patients are appropriately incentivized to refuse unnecessary tests.
“The South Carolina U.S. Attorney’s Office has dedicated considerable resources to pursuing fraud cases that divert federal tax payer dollars from important programs, like health care and defense contracting,” said U.S. Attorney Beth Drake of the District of South Carolina in a DOJ statement. “The goal for our qui tam unit is to protect taxpayers, patients, and soldiers by ensuring that important decisions are made according to medical science and engineering, and not based on dollar signs.”
The case was originally filed by Dr. Michael Mayes, who filed under the qui tam, or whistleblower provisions of the False Claims Act. The act allows the government to intervene and take over a case filed by private citizen.
“This settlement is part of the government’s ongoing efforts to address conduct that allows medical decisions to be influenced by money rather than the best interests of patients,” said U.S. Attorney Channing D. Phillips of the District of Columbia in a DOJ statement. “Our office is pleased to defend the integrity of our healthcare system and to demand the return of ill-gotten gains.”
“We will not allow laboratories to provide financial incentives to induce physicians to steer patients their way,” said Special Agent in Charge Derrick L. Jackson of the U.S. Department of Health and Human Services, Office of Inspector General (HHS-OIG) in Atlanta in the DOJ statement. “The Office of Inspector General will continue to work aggressively to eliminate this type of behavior which ultimately drives up healthcare costs and eliminates fair competition.”
This matter was investigated by the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Offices for the District of South Carolina and the District of Columbia, FBI’s Columbia Field Office and the FBI Healthcare Fraud Unit Major Provider Response Team (MPRT), HHS-OIG, the U.S. Office of Personnel Management’s Office of Inspector General, and the Department of Defense’s Office of Inspector General Defense Criminal Investigative Service.
The government’s intervention in this matter illustrates its emphasis on combating healthcare fraud. One of the most powerful tools in this effort is the False Claims Act. Tips and complaints from all sources about potential fraud, waste, abuse, and mismanagement, can be reported to the Department of Health and Human Services, at 800-HHS-TIPS (800-447-8477).
Filed Under: Drug Discovery
