Whistleblower Claims Lead to Big Settlements for Pathology Group and Laboratory

By Kelly A. Briganti, Editorial Director, G2 Intelligence

Two separate False Claims Act cases initiated by whistleblowers have resulted in settlements for a North Carolina pathology group and a Wisconsin laboratory, its founders and a related company.

In the first case, Piedmont Pathology Associates, Inc. and Piedmont Pathology, P.C., a diagnostic anatomic pathology group settled for $500,000 allegations of False Claims Act violations related to financial relationships with referring physicians. A former contract salesperson brought the qui tam action alleging the practice provided electronic medical record (EMR) software licenses to referring physicians in exchange for referring specimens to the pathology lab.

A separate case involving Wisconsin-based Pharmasan Labs, Inc., a related entity that billed the laboratory’s services, and the two individuals founding both companies, was resolved via an $8.5 million settlement. The government alleged laboratory services billed to Medicare were the result of referrals from non-physician practitioners—generally not paid for by Medicare—and that claims submitted related to ineligible food sensitivity tests but disguised the type of test performed so Medicare would pay the claims. The two entities and their founders agreed to forfeit more than $2.8 million and to pay nearly $5.7 million, and enter into a five-year corporate integrity agreement. The whistleblower originating the case will receive more than $1.1 million, according to the Department of Justice announcement.

These cases demonstrate laboratories and pathology groups remain a target for False Claims enforcement. In an upcoming G2 Intelligence webinar, attorneys Gina L. Simms and Robert E. Mazer of Ober Kaler will discuss recent enforcement trends evidenced by cases like these, triggers that should prompt an internal investigation, how to respond if the government launches an investigation, and compliance tips for avoiding liability. Attend this G2 Intelligence webinar, “Don’t Let Government ‘Take Down’ Your Lab: Understanding and Responding to the Current Enforcement Environment,” Wednesday, Dec. 9, 2015 at 2 p.m. EST. For more information and to register click here, or call customer service at 1-888-739-2315.

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