The Law Firm of Piacentile, Stefanowski & Malherbe LLP

DOJ Files Complaint Against Texas Hospital and Laboratory CEOs and Physicians for Violating the Anti-Kickback Statute

Kickbacks are one of the most common types of fraud that occurs within the healthcare industry. They usually happen when a doctor or a medical provider receives money or some type of benefit in exchange for referrals. This not only erodes the patient’s trust in their doctor, but it can lead a doctor to make decisions that are not beneficial to the patient. Because of this, the federal government created the Anti-Kickback Statute that prohibits reimbursements from federal healthcare programs in situations where the healthcare provider received inappropriate compensation.

One recent example occurred in Texas where, in December of 2021, the Department of Justice filed a complaint against a number of physicians who were involved in an illegal kickback scheme with several laboratories and a hospital. Little River Healthcare had plotted with testing laboratories True Health Diagnostics and Boston Heart Diagnostics to pay doctors for referrals. The scheme involved the hospital paying recruiters who set up independent companies called “management service organizations”, and through these companies paid monies to physicians in exchange for referrals. These payments were labeled as “investment returns” in order to hide their true purpose.  The improper referrals resulted in laboratory tests that were billed to federal healthcare programs. These tests were not only illegal due to the kickbacks, but in some cases were completely unnecessary.

The US government has filed this complaint against the CEOs of the hospital and laboratories involved, as well as the 29 physicians who received kickbacks and made the referrals. They have recovered $31 million dollars from improper billing to federal healthcare programs so far, but they also amended the complaint in May of 2022 to include 6 additional physicians involved in the scheme. The case is currently ongoing and is being handled by attorneys from the Civil Division’s Commercial Litigation Branch and the U.S. Attorney’s Office for the Eastern District of Texas.

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