Feds Settle Kickback Claims with Two Cardiac Labs for $48 Million

Health Diagnostics Laboratory Inc. (HDL), of Richmond, Va., and Singulex Inc. of Alameda, Calif., have agreed to pay $48.5 million to settle charges they violated the federal False Claims Act (FCA).

According to the U.S. Department of Justice, the labs violated anti-kickback laws by paying physicians in exchange for patient referrals in addition to billing federal health care programs for medically unnecessary testing. Pathologists, medical laboratory scientists, and clinical laboratory directors have watched this case closely since it became public knowledge last fall.

HDL will pay $47 million and Singulex will pay $1.5 million under the settlements, which stem from three qui tam, or whistleblower, actions filed under the FCA. Both medical laboratory companies deny wrongdoing and each will enter into a multi-year corporate integrity agreement with the federal government.

“When health care companies pursue profits by paying kickbacks to doctors, they undermine a patient’s ability to trust that medical decisions are being made for scientific reasons, not financial ones,” said Acting U.S. Attorney Vincent H. Cohen Jr. of the District of Columbia. “Those kickbacks also harm the taxpayer because they drive up the cost of federal health care programs with medically unnecessary tests. This significant settlement shows our determination to work with whistleblowers and our federal partners to defend the integrity of the health care system from illegal agreements that hurt patients and taxpayers.”

The government alleged that HDL and Singulex paid physicians processing and handling fees of $10 to $17 per referral as inducements for the physicians to refer patients to them for blood tests. The clinical laboratory companies also routinely waived  patients’ co-payments and deductibles, the government claimed.

HDL and Singulex also conspired with BlueWave Healthcare Consultants Inc., a sales and marketing company to offer these inducements on behalf of the two medical laboratories, the DOJ alleged. As a result, physicians allegedly referred patients to HDL, Singulex, and Berkeley for medically unnecessary tests, which then were billed to federal health care programs, including Medicare, the government charged.

The Anti-Kickback Statute bans medical laboratories or other providers from offering, paying, soliciting, or receiving remuneration to induce referrals for services that federal health programs cover.
As part of the settlements, HDL and Singulex agreed to enter into corporate integrity agreements with the U.S. Department of Health & Human Services Office of Inspector General. The federal announcement did not say how long the corporate integrity agreements would remain in place. The Wall Street Journal reported in March that HDL would operate under a corporate integrity agreement for five years.