BioReference settles whistleblower’s kickback claims with DOJ for $9.85 million

by Ben Vernia | July 17th, 2022

On July 14, the Department of Justice announced that BioReference Health LLC had agreed to pay $9.85 million to settle civil allegations, originally brought by a whistleblower, that the company paid kickbacks to referring physicians in the form of above-market rents. The company is also entering into a 5-year corporate integrity agreement (CIA) with the Office of Inspector General of the Department of Health and Human Services. According to DOJ’s press release:

BioReference Health LLC, formerly known as BioReference Laboratories, Inc., (BioReference), and OPKO Health, Inc. (OPKO) have agreed to pay $9.85 million to resolve alleged violations of the False Claims Act arising from BioReference’s payment of above-market rents to physician landlords for office space in order to induce referrals from those physicians to BioReference. BioReference, a subsidiary of OPKO, is headquartered in New Jersey and is one of the largest clinical laboratories in the United States.

“The integrity of federal health care programs depends on providers making decisions based on the interests of their patients,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “The Department of Justice and its agency partners are committed to enforcing laws prohibiting illegal financial arrangements that may distort health care decision-making and drive up costs to federal health care programs and patients.”

BioReference and OPKO have agreed to pay $9.85 million to resolve allegations that, between January 2013 and March 2021, BioReference made lease payments to physicians and physician groups for the rental of office space for amounts that exceeded fair market value, in violation of the Physician Self‑Referral Law and the Anti-Kickback Statute.  The Physician Self‑Referral Law, commonly known as the Stark Law, prohibits a health care provider from billing for certain services referred by physicians with whom the provider has a financial relationship, unless that relationship satisfies one of the law’s statutory or regulatory exceptions. The Anti‑Kickback Statute prohibits offering or paying remuneration to induce the referral of items or services covered by Medicare, Medicaid and certain other federally funded programs. Both the Stark Law and the Anti-Kickback Statute are intended to ensure that medical judgments are not compromised by improper financial inducements.

As part of today’s settlement, BioReference admitted that it rented the office space from the specified physician practices for Patient Service Centers (PSCs), where patients could have their blood samples taken. In calculating payments under certain PSC lease arrangements, BioReference inaccurately measured the amount of space BioReference would use exclusively and included a disproportionate share of common spaces.  BioReference analyzed referrals from nearby health care providers — including physician-lessors — when deciding whether to open, maintain or close PSCs. Following OPKO’s acquisition of BioReference, the companies conducted multiple internal audits that showed that the payments to the specified physician-lessors exceeded fair market value. BioReference did not report or return any overpayments to federal health care programs.

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In connection with the False Claims Act settlements, BioReference has also entered into a “Corporate Integrity Agreement” with the Department of Health and Human Services, Office of Inspector General (HHS-OIG). 

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The whistleblower, a former BioReference employee, will receive $1.7 million (a relator’s share of approximately 17.3%).

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