Virginia Laboratory to Pay $758,000 to Settle Allegations of Kickbacks to Doctors and Marketers

Note: View settlement here.

Clinical laboratory NEXT Bio-Research Services LLC, doing business as NEXT Molecular Analytics (NEXT), of Chester, Virginia, has agreed to pay at least $758,000 to the United States to resolve False Claims Act allegations involving illegal kickbacks to doctors and marketers. NEXT has agreed to cooperate with the Department of Justice’s investigations of, and litigation against, other participants in the alleged schemes.

“This settlement shows DOJ’s commitment to rooting out illegal kickback schemes that have no place in our federal health care programs,” said Assistant Attorney General Brett A. Shumate of the Justice Department’s Civil Division. “The Department is committed to pursuing these important investigations and health care fraud enforcement across the board.”

“Physicians should make decisions based the best interests of their patients, not their own personal financial interests,” said U.S. Attorney Eric Grant for the Eastern District of California. “This settlement demonstrates my office’s commitment to taking all appropriate action to prevent improper inducements that can corrupt the integrity of physician-patient relationships.”

“Violations of the Anti-Kickback Statute are not victimless crimes — they compromise the integrity of medical decision-making and betray the trust patients place in their providers,” stated Deputy Inspector General for Investigations Christian J. Schrank of the Department of Health and Human Services Office of Inspector General (HHS-OIG). “When health care decisions are shaped by hidden financial motives, patients may be misled, unnecessary services may be rendered, and taxpayer-funded programs may be manipulated for personal gain. HHS-OIG is resolutely committed to holding participants in federal health care programs fully accountable to the law.”

The Anti-Kickback Statute prohibits offering, paying, soliciting, or receiving remuneration to induce referrals of items or services covered by Medicare, Medicaid, and other federally funded health care programs. It is intended to ensure that medical providers’ judgments are not compromised by improper financial incentives and are instead based on the best interests of their patients.

Under the settlement with the United States, NEXT has agreed to pay $758,000, plus additional amounts if certain financial contingencies occur. The settlement resolves allegations that NEXT knowingly and willfully paid kickbacks to induce laboratory testing referrals. NEXT allegedly paid doctors in Texas and Arkansas thousands of dollars in kickbacks, which were disguised as consulting fees and medical director fees but actually were offered to induce the doctor to order NEXT laboratory tests. NEXT also allegedly paid commissions based on the volume and value of referrals to certain independent contractor marketers to arrange for and recommend that doctors order NEXT laboratory tests. The settlement resolves allegations that NEXT billed Medicare, Medicaid, and TRICARE for the laboratory tests despite knowing of these kickbacks.

The settlement resolves certain allegations in a lawsuit originally filed by Sunil Wadhwa and Ken Newton under the whistleblower provisions of the False Claims Act, which permit private parties to sue on behalf of the government and receive a share of any recovery. Relators will receive $113,700 of the proceeds from the settlement. The qui tam case is captioned United States ex rel. Wadhwa and Newton v. Admera Health LLC, et al. (E.D. Cal.).

The settlement announced today was the result of a coordinated effort between the Civil Division’s Commercial Litigation Branch, Fraud Section and the U.S. Attorney’s Offices for the District of New Jersey and the Eastern District of California, with assistance from HHS-OIG. It was handled by Trial Attorneys Christopher Terranova and Elizabeth J. Kappakas in the Civil Division’s Commercial Litigation Branch, Fraud Section, Assistant U.S. Attorney Kruti Dharia for the District of New Jersey, and Assistant U.S. Attorney Catherine J. Swann for the Eastern District of California. The United States previously settled related allegations with NEXT’s National Sales Director and NEXT’s independent contractor marketers OC Genetic Consultants Inc. and Ralston Health Group Inc.

The government’s pursuit of these matters illustrates its emphasis on combating health care 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 1-800-HHS-TIPS (800-447-8477).

The claims resolved by the settlements are allegations only, and there has been no determination of liability.