Bostwick Laboratories, Inc. Pays $503,668 To Resolve Civil Fraud Allegations That Its Sales Representatives Used A Clinical Study To Induce Physicians To Utilize Its Services

Bostwick Laboratories, Inc. (“Bostwick”) has entered into a civil settlement agreement in which it agreed to pay the United States $503,668.00 to resolve allegations that the company made illegal payments to induce certain physicians to utilize Bostwick’s laboratory testing services – some of which were not medically necessary under the circumstances.

The settlement was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York and Tom O’Donnell, Special Agent-in-Charge of New York’s Office of the Inspector General for the Department of Health and Human Services (HHS).

The government alleges that Bostwick made the illegal payments to physicians to induce them to enroll their patients in a study sponsored by Bostwick called “Determination of the Accuracy of PCA3Plus Urine Assay for the Detection of Prostate Cancer” (the “PCA3Plus Study”). One requirement of the study was that for each patient enrolled, the physicians were obligated to send both the PCA3Plus urine assay for the PCA3Plus Study and prostate biopsy samples – which otherwise could have been sent to any number of laboratories – to Bostwick for analysis. As a result, Bostwick in effect paid those physicians to steer their prostate biopsy analysis business to its laboratories. Bostwick then submitted claims to Medicare and Tricare for reimbursement for both the prostate biopsy test analysis and the PCA3Plus urine assay analysis for each patient enrolled in the PCA3Plus Study, even though the prostate biopsy was the “gold standard” for prostate cancer detection, and the PCA3Plus urine assay was not medically necessary in such situations. In settling this matter, Bostwick is not admitting the government’s allegations.

“Decisions involving medical treatment and testing go to the heart of the doctor patient relationship, and must be based on the needs of each patient and possibility of the advancement of science. They cannot and should not be based on illegal payments from laboratories. Our office is committed to stopping such inducements, and returning patient care to the forefront of the doctors’ decisions,” stated United States Attorney Lynch.

“In order to ensure the best possible treatment for our nation’s Medicare population, it is important that the relationship between labs and physicians be free of any illegal inducements, and we will continue to investigate such allegations,” stated HHS Special Agent-in-Charge O’Donnell.

The investigation that led to the settlement began after Robert Gluck, M.D., an urologist who had been approached by Bostwick regarding participation in the PCA3Plus Study, filed a complaint against the company on behalf of the United States in the Eastern District of New York. Under the federal False Claims Act, a private individual who has uncovered fraud against the federal government may file a suit in federal court on behalf of the United States. If the United States is successful in resolving those claims, the individual who filed the complaint may receive a share of the recovery.

The government’s case was handled by Assistant U.S. Attorneys Scott R. Landau and Paul Kaufman.