Texas Pathology Lab Settles EHR Consulting Kickback Claims for $63.5 Million

Case: In 2006, HHS implemented an AKS safe harbor and Stark exception letting non-physician providers pay up to 85% of physicians’ costs to help them transition from paper records to EHR systems. But Inform Diagnostics (then known as Miraca Life Sciences Inc.) allegedly stretched the rules beyond the breaking point by offering physicians discounts on EHR consulting services in exchange for lab referrals, It even based individual discount amounts on the anticipated return on investment the particular physician’s referrals would generate and offered the deal only to physicians it targeted as high-volume referral sources. Three different whistleblowers filed qui tam lawsuits and now Inform has agreed to settle the claims for $63.5 million, to be paid by its former parent, Japanese company Miraca Holdings Inc.

Significance: Under the False Claims Act first-to-file rule, the first whistleblower to file a lawsuit is the only one allowed to bring an FCA case arising out of a particular fraud scheme. But each of the three whistleblowers in this case (including the former Miraca Life Science Sr. Vice President of Commercial Operations, former dermapathologists and a company called LPF LLC) had legally distinct claims based on different factual information. Result: All three cases were allowed to proceed. And when the DOJ decided to intervene in each case, Inform/Miraca saw the writing on the wall and agreed to settle.