Laboratory to Pay $26.67 Million to Settle Allegations of Kickbacks to Physicians

SACRAMENTO, Calif. — Laboratory Boston Heart Diagnostics Corporation (Boston Heart), of Framingham, Massachusetts, has agreed to pay $26.67 million to resolve False Claims Act allegations involving payments for patient referrals in violation of the Anti-Kickback Statute and the Stark Law and claims otherwise improperly billed to federal health care programs for laboratory testing, U.S. Attorney McGregor W. Scott announced today.

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 programs. The Stark Law forbids a laboratory from billing Medicare and Medicaid for certain services referred by physicians that have a financial relationship with the laboratory. The Anti-Kickback Statute and the Stark Law are 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.

The settlement resolves allegations that Boston Heart provided physician practices with in-office dieticians in exchange for physician referrals for laboratory testing. These allegations were originally made in a case filed in the Eastern District of California under the whistleblower, or qui tam, provision of the False Claims Act. The Act permits private parties to sue for fraud on behalf of the United States and to share in any recovery. The settlement also resolves allegations that Boston Heart directly or indirectly paid processing and handling fees and waived patient copayments and deductibles. These allegations were originally made in the District of Columbia under the Act. Whistleblowers Chris Riedel and Claudia Bradshaw will receive approximately $4.36 million of the settlement.

In addition, the settlement resolves allegations that Boston Heart conspired with others to pay doctors kickbacks disguised as investment returns and conspired with certain Texas hospitals and others to submit claims for outpatient laboratory testing for patients who were not hospital outpatients, in order to receive higher reimbursements from federal health care programs.

“This office will continue to take all appropriate action to prevent improper inducements that can corrupt the integrity of physician decision-making,” said U.S. Attorney Scott.

The civil settlement was the result of an investigation by the U.S. Attorney’s Offices for the Eastern District of California, the Eastern District of Texas, and the District of Columbia, along with the Commercial Litigation Branch of the Justice Department’s Civil Division, OIG-HHS, and DCIS. The two lawsuits are captioned United States ex rel. FBH1 LLC v. Boston Heart Diagnostics Corp., No. 17-cv-206 (E.D. Cal.) and United States ex rel. Riedel v. Boston Heart Diagnostics Corp., No. 12-cv-1423 (D.D.C.). Assistant U.S. Attorney Catherine J. Swann handled the Eastern District of California matter for the United States. The claims resolved by the settlement are allegations only and there has been no determination of liability.