Lab Company Quest Diagnostics Settles False Claims Act Lawsuits for $6 Million Dollars

In what has been a pattern in recent years, another diagnostics lab company settled for millions of dollars in a False Claims Act (“FCA”) allegation.  The main allegations here involved labs paying doctors kickbacks so that the doctors refer to the labs for certain services that were not necessary.  This was not only fraud, it was a violation of other laws such as the Anti-Kickback Statute and Stark Law.  In recent years, another lab company Singulex, Inc. in Alameda, California paid close to $1.5 million dollars to settle similar allegations.

FCA law suits are also referred to as “qui tam.”   Here, the law suit alleged that the Lab company Quest Diagnostics, or Berkeley HeartLab, incentivized physicians to send it unnecessary lab tests by waiving co-pays and paying physicians kickbacks through “process and handling fees.”   When one physician noticed this illegal activity, and that the tests did not help with treatment decisions, he reported this illegitimate and expensive activity to the government under seal.  When Quest Diagnostics realized it was caught red handed, it quickly settled to that the bad publicity could go away.  We are glad Dr. Mayes was brave to bring this type of fraudulent behavior to a halt.  At the same time, for being the whistleblower, he will also get 26 percent of the recovery.

Under the FCA, the Judge is entitled to order the defendant to pay triple the actual damages that the jury finds.  In addition, the FCA also permits statutory penalties from $5,500 to $11,000 for each false claim submitted by the defendant.  As result, the whistleblower will receive approximately 15 to 25 percent of the total FCA recovery plus attorney’s fees.

As the main enforcement arm of the federal government, the Justice Department reviews all cases filed under the FCA.   Then, once the whistleblower case is assessed, the government decides whether it will prosecute or allow the whistleblower to bring the complaint on the government’s behalf.

The FCA is used to stem out fraud related to billing, staffing, and kickbacks. Examples of these are when financial companies are supposed to abide by state and federal laws and chose to ignore them.  They also bills for services that were not provided or the bill was submitted at an improperly higher rate of reimbursement for the services.  In addition, financial companies are often fount to illegally bill the government for substandard services by fraudulently certifying otherwise. Alternatively, these companies may realize that they have credit from their services that they have to repay to the government, but the companies do not reimburse the government within the 60 day time frame.  See these blogs for more examples of the FCA.

If you witness any potential false claims in California (i.e. requests for reimbursement to the government, not actually rendering work when reimbursement is received, or receiving and knowingly retaining an overpayment) by your company, or you are retaliated against for voicing your concern about potential wrongdoing, immediate action is vital.  Contact the experienced employment law attorneys at Stephen Danz & Associates for a free consultation to discuss your circumstances and legal options.