Former CEO-Physician and Drug Testing Laboratory Pay $9.35 Million to Settle False Claims Act Allegations
Physician Agrees to 5-Year Exclusion from Federal Health Care Programs as Part of Settlement
Dr. Jonathan Oppenheimer, former owner and CEO of Nashville drug testing laboratory Prost-Data, Inc., d/b/a OURLab (“OURLab”), OPKO Health, Inc. (“OPKO”), and OPKO Lab, LLC, have agreed to pay $9.35 million to resolve False Claims Act (“FCA”) allegations, announced David Rivera, United States Attorney for the Middle District of Tennessee. Pursuant to the civil settlement, Oppenheimer, and OPKO will be jointly and severally liable for the settlement amount. OPKO is a successor to OPKO Lab, LLC, which purchased OURLab from Oppenheimer in December 2012, after OURLab and Oppenheimer instituted the alleged conduct. OPKO Lab, LLC ceased commercial operations in early 2016 and is no longer billing federal payors. Oppenheimer has agreed to an exclusion from participation in all federal health care programs for 5 years as part of the agreement.
“Enforcement of the False Claims Act is a priority of the Department of Justice and this Office,” said United States Attorney David Rivera. “The U.S. Attorney’s Office and our law enforcement partners are committed to protecting the public fisc and protecting the integrity of federal healthcare programs by vigorously investigating alleged violations of the Anti-Kickback Statute and Stark Law.”
The settlement resolves allegations by the United States that Dr. Oppenheimer and OURLab, and OPKO as a successor company, submitted false claims for payment to the Medicare Part B program as a result of violations of the Federal Anti-Kickback Statute (“AKS”) and the Stark Law (“Stark”) from about June 2007 through January 2015. These violations relate to donations that OURLab and Oppenheimer made toward electronic health records (“EHR”) systems purchased by their client physician practices from EHR vendors. OURLab and Oppenheimer ostensibly made these contributions pursuant to the AKS safe harbor and Stark exception that allowed laboratories to contribute to a practice’s purchase of an EHR system from 2006 until drug testing laboratories were removed from the scope of these provisions in 2013. Although these provisions allowed certain entities to contribute up to 85% of the purchase price of an EHR system to a vendor on behalf of a physician’s practice, they placed certain restrictions on such activities. The United States alleged that the conduct of OURLab and Oppenheimer fell outside of the restrictions set forth in the AKS EHR safe harbor and the Stark EHR exception, and constituted violations of those statutes.
Specifically, OURLab and Oppenheimer made monetary contributions toward EHR systems obtained by their client physician practices, and, in making these contributions, they violated the AKS EHR safe harbor and the Stark EHR exception by, among other things, (1) directly considering the volume and/or value of referrals and business, including return on investment, between OURLab and the physicians’ practice when determining whether to make an EHR donation and the amount of the donation; (2) improperly considering the volume of Medicare business supplied by the physician practice when considering an EHR donation; and (3) occasionally withholding previously agreed-upon EHR donation payments until they received a certain number of referrals from the physicians’ practice. These actions placed OURLab and Oppenheimer outside of the scope of the EHR safe harbor provisions for the AKS and Stark, and constituted illegal kickbacks and physician remuneration.
"This laboratory traded physicians free computer software for patient referrals," said Derrick L. Jackson, Special Agent in Charge at the U.S. Department of Health and Human Services, Office of Inspector General in Atlanta. "Such quid pro quo arrangements are kickbacks that stifle competition and steer business to the company offering the inducements."
The settlement agreement also resolves allegations that OURLab, and subsequently OPKO Lab, LLC, billed the Medicare and TRICARE programs for fluorescence in situ hybridization (“FISH”) tests despite a June 2012 adverse coverage determination for the particular type of FISH test being used. A FISH test maps the genetic material in human cells. Because FISH tests can detect abnormalities associated with cancer, it may be useful for diagnosing certain types of the disease.
The United States’ investigation corroborated conduct originally alleged in a qui tam complaint filed by a former employee of OURLab pursuant to the FCA. The qui tam provisions of the False Claims Act allows for whistleblowers, or relators, to file suit for violations of the act on behalf of the government. The relator is entitled to a percentage of the amount recovered by the government as a result of the information provided that resulted in the subsequent investigation and resolution. The relator in this case will receive $1.683 million.
This matter was investigated by the Department of Health and Human Services Office of Inspector General and the United States Attorney’s Office for the Middle District of Tennessee. The United States was represented by Assistant U.S. Attorney Christopher C. Sabis.
The case is docketed as United States ex rel. Newman v. OPKO Health Inc., et al., No. 3:13-cv-0700 (M.D. Tenn.). The claims settled by this agreement are allegations only, and there has been no determination of liability.