Healthcare Fraud Settlements Exceed $59 Million for Kickback Schemes

Strategic Insights -

The US Department of Justice has secured settlements exceeding $59 million from multiple parties involved in kickback schemes for laboratory testing referrals in violation of the Anti-Kickback Statute. The settlements involve several healthcare providers, laboratories, and marketers who allegedly engaged in schemes to pay kickbacks disguised as consulting fees, processing and handling fees, and waivers of copayments and deductibles to induce referrals.

The largest settlement involves former True Health Diagnostics CEO Christopher Grottenthaler, who agreed to pay $4.25 million to resolve allegations that he facilitated a kickback scheme between marketers and doctors. The scheme allegedly involved offering and paying kickbacks disguised as MSO distributions to induce laboratory testing referrals. Grottenthaler allegedly continued participation in the scheme despite warnings that it was illegal.

Two physicians, Hong Davis and Elizabeth Seymour, also agreed to pay $124,627 and $234,215, respectively, to resolve allegations that they received kickbacks in return for ordering laboratory tests. The settlements also involve seven marketers who agreed to pay a total of $1,459,620 to resolve allegations that they paid kickbacks to doctors to induce laboratory testing referrals.

The settlements demonstrate the government's commitment to combating healthcare fraud and settling false claims for government funds. The settlements also highlight the importance of the Anti-Kickback Statute in ensuring that medical providers' judgments are not compromised by improper financial incentives.

Key Takeaways:

  • Christopher Grottenthaler, former CEO of True Health Diagnostics, agreed to pay $4.25 million to resolve allegations of facilitating kickback schemes.
  • Two physicians, Hong Davis and Elizabeth Seymour, agreed to pay $124,627 and $234,215, respectively, to resolve allegations of receiving kickbacks for ordering laboratory tests.
  • Seven marketers agreed to pay a total of $1,459,620 to resolve allegations of paying kickbacks to doctors to induce laboratory testing referrals.
  • The settlements demonstrate the importance of the Anti-Kickback Statute in preventing kickback schemes and ensuring that medical providers' judgments are not compromised by improper financial incentives.
  • The settlements also highlight the role of the False Claims Act in enabling the government to pursue and settle false claims for government funds.
  • The settlements reflect the government's commitment to combating healthcare fraud and maintaining the integrity of federal healthcare programs.

Statistics:

  • Total settlements: $59,045,609 (Grottenthaler settlement: $4,250,000, Davis settlement: $124,627, Seymour settlement: $234,215, marketers' settlements: $1,459,620)
  • Total civil settlements to date: 50 physicians
  • Recoveries from physician settlements: $59 million
  • Total alleged payments to physicians: $1.8 million
  • Settlements announced today resolve allegations against 10 individuals and companies

Sources:

  • United States, et al. ex rel. STF LLC v. True Health Diagnostics LLC et al., No. 4:16-cv-547 (E.D. Tex.)
  • United States v. Susan Hertzberg, et al., No. 6:22-cr-3-JDK (E.D. Tex.)
  • United States v. Christopher Grottenthaler, et al., No. 6:22-cr-135-JDK (E.D. Tex.)
  • Department of Health and Human Services, Office of Inspector General (HHS-OIG)
  • Department of Defense Office of Inspector General's Defense Criminal Investigative Service (DCIS)
  • US State of California