Medical Testing and the False Claims Act

If the past year is any indication, companies and practitioners involved in medical testing are facing increasing scrutiny under the False Claims Act (FCA). From high-profile settlements against large companies to Department of Justice (DOJ)-backed lawsuits against individual doctors, we believe that recent trends show just how vital whistleblowers will be to addressing medical testing fraud in the near future.

Notable Medical Testing Fraud Cases

In July 2021, the DOJ reported that Alliance Family of Companies LLC, a national electroencephalography (EEG) testing company based in Texas, had agreed to pay $13.5 million to resolve FCA allegations.

According to the DOJ, Alliance knowingly submitted false claims for payment that involved kickbacks to referring physicians and sought payment for work that was not performed or that required a lower level of reimbursement. Among other things, the DOJ alleged that Alliance used inaccurate billing codes for EEG testing to generate higher reimbursements and billed for specialized testing analyses that it never actually performed.

In August 2021, Abbott, a multinational health care company, agreed to pay $160 million to settle allegations that its newly acquired subsidiary, a mail-order diabetic testing supplies company, had violated the FCA.

According to the allegations, Abbott’s subsidiary made claims for payment to Medicare that involved illegal kickbacks to Medicare beneficiaries, as well as claims involving tests for ineligible and even deceased patients.

Just this week, in January 2022, a federal district court held that the DOJ adequately alleged FCA claims to proceed with its lawsuit against a Kentucky doctor accused of medical testing fraud. According to the court, the DOJ sufficiently alleged at this stage of the lawsuit that the doctor billed Medicare for genetic medical tests that he knew were not medically necessary, all as part of an illicit kickback scheme with a laboratory.

Looking Ahead

The preceding cases help demonstrate just how prevalent illegal kickbacks and unnecessary, inadequate services are in the medical testing industry. While the FCA provides a critical tool for the DOJ to combat this particular species of fraud, it often impossible for allegations to even come to light without the aid of whistleblowers.

Whether currently or formerly employed by a fraudulent company, a contractor for the company, or otherwise, those with insider knowledge of federal health care fraud could be the key to stopping illegal and medically dangerous schemes like those discussed above. Under the FCA’s qui tam provisions, successful whistleblowers are not only protected from retaliation, but can receive up to 30% of the overall reward collected.

At Price Armstrong, we have extensive experience litigating health care fraud cases under the False Claims Act. We work hard to both protect whistleblowers and maximize their recovery under the False Claims Act. Contact us today for a free initial consultation and review of your case.