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Labs in Court Weekly Roundup

by | May 24, 2022 | Articles, News, Open Content

Settlements for False Claims Act allegations the theme in recent enforcement actions involving the healthcare industry.

Alleged false claims were the key theme in major cases involving the healthcare industry announced over the past week. Three out of five enforcement actions announced by the U.S. Department of Justice (DOJ) from May 16 to May 19 involved significant payments to settle false billing allegations. Here’s a quick summary of the cases:

May 16: An Oklahoma City hospital paid $1,151,770.50 to settle allegations that it had submitted false claims to Medicare. According to the DOJ, Oklahoma Heart Hospital South, LLC (OHHS), the limited liability company that owns and operates the acute care facility Oklahoma Heart Hospital South, found billing issues after an internal review and audit. OHHS self-disclosed the issues to the United States to investigate. The billing problems in question allegedly involved claims submitted for Intensive Cardiac Rehabilitation services provided to Medicare beneficiaries, which require an up-to-date treatment plan and sign-off from a physician, which the hospital did not receive.1

May 17: The DOJ filed a False Claims Act lawsuit against The Prometheus Group, a company that manufactures pelvic muscle therapeutic systems and related rectal probes, and its owner/president. According to the DOJ, the New Hampshire manufacturer and its owner caused healthcare providers to bill Medicare for services “in which the providers improperly re-used single-user rectal sensors and single-use catheters on multiple patients.” Although Prometheus’ products were only cleared by the FDA for single-use applications, the company allegedly instructed healthcare providers to re-use them, putting patients at risk, and causing improper billing for services.2

May 17: In another case of false billing allegations due to not receiving proper physician oversight, the University of Maryland Shore Regional Health in Easton, Maryland, paid $296,870 to settle False Claims Act allegations. According to the DOJ, Shore Health allegedly submitted false claims for diagnostic services and radiation therapy without the required physician supervision.3

May 19: The owner of Las Vegas-based Laboratory Services of America, LLC (LSA), was sentenced for his role in a Medicare kickback scheme. According to the DOJ, the scheme involved LSA’s owner paying kickbacks to the owner of another lab to reroute samples to LSA for testing, which he then billed the U.S. government for. LSA’s owner must pay a total of $510,000 in forfeiture, restitution, and fines, and also faces four months of house arrest. He will also be excluded from participating in federal healthcare benefit programs in the future.4

May 19: A Florida-based company that operates Medicare approved Independent Diagnostic Testing Facilities (IDTF) paid just over $3 million to settle allegations that it violated the False Claims Act. The company, VirtuOx, Inc., allegedly stated that certain services it provided were performed in a different place in order to receive a higher rate of reimbursement from Medicare, according to the DOJ. VirtuOx also allegedly incorrectly billed Medicare for similar services relating to pulse oximetry tests, billing for two separate tests when only one was performed.5


  1. https://www.justice.gov/usao-wdok/pr/oklahoma-city-hospital-pays-over-11-million-settle-allegations-submitting-false-claims
  2. https://www.justice.gov/opa/pr/justice-department-files-false-claims-act-complaint-against-medical-device-manufacturer-and
  3. https://www.justice.gov/usao-md/pr/university-maryland-shore-regional-health-agrees-pay-296870-settle-federal-false-claims
  4. https://www.justice.gov/usao-wdva/pr/owner-drug-testing-lab-sentenced-medicare-kickback-scheme
  5. https://www.justice.gov/usao-sdfl/pr/miami-based-virtuox-inc-agrees-pay-315-million-resolve-allegations-it-fraudulently