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The United States Secures $114 Million Judgment from Three People Accused of Paying Kickback and Filing False Claims

Despite the crackdown on health care fraud that the government implemented during the last administration, certain individuals and entities continue to breach the trust between healthcare providers and patients. This was the case late last month as the Department of Justice announced that the US has obtained a judgment in the amount of $111,109,655.30 against three defendants for their role in a kickback scheme and for filing false claims. The individuals – LaTonya Mallory, Floyd Calhoun Dent III and Robert Bradford Johnson – were accused of paying false remuneration to physicians in exchange for patient referrals. This violates the False Claims Act as well as the Anti-Kickback Statute. Finally, the government charged that as a part of these activities, the group caused two laboratories to bill for medically unnecessary testing.

“Improper financial relationships between physicians and laboratories can distort a physicians’ best judgment for their patients, in addition to undermining patient health and trust,” said Acting Assistant Attorney General for the Justice Department’s Civil Division Chad Readler. “Executives and other individuals who break the law will be held personally accountable for their actions.” During their trial, the defendants were proven to have paid physicians remuneration disguised as processing fees. The fees ranged from between $10 to $17 per patient for blood testing. The testing took place at Health Diagnostics Laboratory Inc. (HDL), of Richmond, Virginia; and Singulex Inc., of Alameda, California. Moreover, the government also introduced evidence of a kickback scheme that resulted in physicians referring patients to HDL and Singulex for medically unnecessary test. These tests were later billed to several federal health care programs.

The three defendants were found to be liable for causing the submission of more than 35,000 false claims worth in excess of $16 million. These claims were submitted to Medicare and TRICARE by HDL. The jury also found that two of the defendants – Dent and Johnson – were liable for the filing of an additional 3,813 false claims and that this cost the government $467,935.

“The Court’s damages award in this case recognizes the seriousness of what these defendants did,” said Sherri A. Lydon, U.S. Attorney for the District of South Carolina. “Paying kickbacks to cause unnecessary tests injures patients, the Medicare Program, and American taxpayers and the District of South Carolina will continue to pursue those who participate in such conduct.” The claims resolves lawsuits that were brought about by three plaintiffs – Dr. Michael Mayes, Scarlett Lutz, Kayla Webster, and Chris Reidel – under the qui tam, or whistleblower, provisions of the False Claims Act. Under the act, individuals can sue on behalf of the government for false claims and share in any recovery. The act also permits the United States to intervene on behalf of whistleblowers as it did in this case. Whistleblowers often retain the services of a qui tam lawyer or false claims act lawyer to represent them. The whistleblowers’ share of any recovery has yet to be determined.