Bostwick Laboratories Agrees to Pay Up to $3.75 Million
The Justice Department has racked up another victory in its fight against physicians who are alleged to have defrauded Medicare and Medicaid. Last January, Dr. David G. Bostwick agreed to pay the US government up to $3.75 million to resolve claims that he violated the False Claim Act after billing Medicare and Medicaid for unnecessary cancer detection tests and for offering incentives to other physicians to obtain Medicare and Medicaid business. Dr. Bostwick was the founder, owner and CEO of Bostwick Labs – centered in Virginia – from 1999 – 2011. A spokesperson from the Justice Department – Principal Deputy Assistant Attorney General Benjamin C. Mizer – made the announcement on January 8, 2016. “The Department of Justice is committed to ensuring that every laboratory test ordered is based on the medical needs of the patient and not just to increase physician and laboratory profits.”
The settlement resolved claims that from 2006 – 2011, Dr. Bostwick directed his lab to bill Medicare and Medicaid for expensive cancer detection tests as well as other tests that were medically unnecessary. Moreover, the tests were allegedly performed without the treating physicians’ consent or orders. During the period covered by the settlement, Medicare reimbursement for these particular cancer tests ranged from $456 to $966 per test. The settlement also resolved allegations that Dr. Bostwick – through Bostwick Laboratories – offered discounts and billing arrangements to physicians to induce them to refer business to his laboratories in violation of federal Anti-Kickback Statute. The Anti-Kickback Statute (42 U.S.C. § 1320a-7b), prohibits offering, paying, soliciting or receiving remuneration to induce referrals of items or services covered by federally funded programs. The Statute is intended to ensure that a physician’s medical judgment is not improperly compromised by financial incentives.
“We will continue to combat fraud against federal health care programs through actions against health care providers and by seeking accountability from responsible individuals,” said U.S. Attorney Carter M. Stewart for the Southern District of Ohio. Under the settlement, Dr. Bostwick agreed to pay over $2.6 million plus an additional $1.125 million if certain financial contingencies occurred within the next five years – for a total potential payment of up to $3.75 million. On Aug. 28, 2014, Bostwick Laboratories previously agreed to pay over $6.5 million to resolve the allegations in the lawsuit.
The allegations resolved by the settlement, were originally brought by whistleblower Michael Daughtery under the qui tam provisions of the False Claims Act. The act allows whistleblowers to receive any share of funds recovered from the government’s successful prosecution of entities that falsely claim federal funds. Daughtery – as a Medicare fraud whistleblower – will receive over $2.5 million from the settlement. The act allowed Daughtery to sue on to sue on behalf of the government as a whistleblower. Medicare is a federally funded health insurance program for people aged 65 or older as well as other qualifying individuals. The government’s pursuit of such claims illustrates its emphasis on combating health care fraud via its Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative. The initiative was launched in May of 2009 and since then has recovered a total of more than $27.1 billion through False Claims Act cases.
