US gets over $114 million judgment against laboratory testing fraud defendants in South Carolina

by Ben Vernia | June 5th, 2018

On May 29, the Department of Justice announced that the a District Judge in South Carolina had entered judgment in the amount of over $114 million following a jury trial in three consolidated False Claims Act cases. According to DOJ’s press release:

On May 23, 2018, the United States District Court in the District of South Carolina entered judgment for the United States in the amounts of $111,109,655.30 against defendants LaTonya Mallory, Floyd Calhoun Dent III and Robert Bradford Johnson, and for an additional $3,039,006.56 against Johnson and Dent, the Department of Justice announced today.  The judgment follows the January 31, 2018, jury verdict finding the three individuals liable for violating the False Claims Act (FCA) by paying remuneration to physicians in exchange for patient referrals, in violation of the Anti-Kickback Statute, and causing two laboratories to bill federal health care programs for medically unnecessary testing.

*   *   *

During a two-week jury trial held in Charleston, South Carolina, the government introduced evidence that the defendants paid physicians remuneration disguised as processing and handling fees of between $10 and $17 for each patient they referred to two blood testing laboratories:  Health Diagnostics Laboratory Inc. (HDL), of Richmond, Virginia; and Singulex Inc., of Alameda, California.  The government also introduced evidence that the kickback scheme resulted in physicians referring patients to HDL and Singulex for medically unnecessary tests, which were then billed to federal health care programs.

The jury found Mallory, HDL’s former CEO, and Johnson and Dent, who marketed and sold HDL’s and Singulex’s tests, jointly and severally liable for causing the submission of 35,074 false claims, worth $16,601,591, submitted to Medicare and TRICARE by HDL.  The jury also found defendants Dent and Johnson jointly and severally liable for an additional 3,813 false claims, worth $467,935, submitted by Singulex.  As provided by the FCA, the Court trebled those damage amounts, offset settlement payments received from HDL and Singulex for the same claims, and awarded $63.8 million in penalties requested by the United States, for a total judgment of $114,148,661.86.

The Anti-Kickback Statute prohibits offering, paying, soliciting or receiving remuneration to induce referrals of items or services covered by federally funded programs.  The Anti-Kickback Statute is intended to ensure that a physician’s medical judgment is not compromised by improper financial incentives and is instead based on the best interests of the patient.

*   *   *

The claims resolved by the court’s order were originally brought in three lawsuits filed by 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, private citizens can bring suit on behalf of the government for false claims and share in any recovery.  The Act permits the United States to intervene in and take over the whistleblower suit, as the United States did, in part, in the three consolidated actions against Mallory, Dent, Johnson and others in August 2015.  The whistleblowers’ share of any recovery has yet to be determined.

*   *   *

The government added that the share of the proceeds the four whistleblowers will receive has yet to be determined.

Leave a Reply

Recent Posts

Recent Comments