Medical Malpractice and Personal Injury Law Blog

Settlement Agreement Reached in Case Involving Lab Fraud Scheme

Posted by Briggs Bedigian | Dec 12, 2019 | 0 Comments

Massachusetts diagnostics company has agreed to pay just shy of $27 million to settle claims that it fraudulently obtained referrals in exchange for kickbacks.  The company, Boston Heart Diagnostics Corporation, carried out the scheme by colluding with doctors at various Texas hospitals. Boston Heart provided these doctors with benefits such as in-office dietitians, comped processing and handling fees, and waived patient co-payments and deductibles. The doctors, in return, would refer patients to Boston Heart for laboratory testing. Many of these laboratory tests were billed to federal healthcare programs.

Two whistleblowers, one in California and one in the District of Columbia, came forward to federal officials to report the conspiracy, which took place from 2015 to 2017. This prompted the United States Department of Justice to investigate the matter. In addition to exchanging benefits for referrals, it was alleged that the diagnostics company worked with certain Texas hospitals to submit outpatient claims for individuals who were not actually hospital outpatients. 

According to the current president of Boston Heart Diagnostics, "There were no claims that individual patients were harmed as a result of the alleged conduct." As part of the settlement agreement, the company did not admit liability. The current president, who took on the role after the claims were made, stressed that the company is under new leadership that is committed to complying with all federal and state laws, regulations,  and rules. 

The conspiracy between the testing company and the doctors marks the second story this month highlighting physicians taking kickbacks. Last week, a New York doctor was convicted of accepting thousands of dollars in bribes and other perks from Insys Therapeutics, Inc., in exchange for prescribing an addictive fentanyl spray to his patients. The doctor was the fourth medical practitioner to face trial on charges stemming from an alleged wide-ranging bribery scheme orchestrated by Insys, which is now bankrupt.

Prosecutors claim that Insys had a large network of physicians that they would pay to act as "speakers" at sham events that purported to educate clinicians about its fentanyl spray. In reality, these "speaker fees" were large sums of money that were actually used to bribe the doctors to prescribe their fentanyl spray, Subsys. The U.S. Food and Drug Administration had approved Subsys for use in treating cancer pain, but doctors who took these bribes often prescribed it to non-cancer patients.

According to the United States Attorney for the United States District Court for the Eastern District of California who announced the settlement agreement involving Boston Heart Diagnostics, “This office will continue to take all appropriate action to prevent improper inducements that can corrupt the integrity of physician decision-making.”

About the Author

Briggs Bedigian

H. Briggs Bedigian (“Briggs”) is a founding partner of Gilman & Bedigian, LLC.  Prior to forming Gilman & Bedigian, LLC, Briggs was a partner at Wais, Vogelstein and Bedigian, LLC, where he was the head of the firm's litigation practice.  Briggs' legal practice is focused on representing clients involved in medical malpractice and catastrophic personal injury cases. 

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