Former Texas laboratory company, owner, agree to pay at least $5.7 million to settle whistleblower’s allegations that the company overbilled for laboratory technician travel

by Ben Vernia | August 22nd, 2023

On August 1, the Department of Justice announced that the owner of a defunct laboratory company had agreed to pay a minimum of $5.7 million to settle allegations originally brought in a whistleblower’s qui tam suit that the company overbilled Medicare for travel charges for laboratory technicians. According to DOJ’s press release:

BestCare Laboratory Services LLC (BestCare), a now defunct Texas-based company that operated as a clinical laboratory, and its owner and founder, Karim A. Maghareh, have agreed to pay an additional $5.7 million to settle an outstanding False Claims Act judgment against them. The judgment was entered in 2018 after a court found that BestCare knowingly submitted false claims to Medicare, as directed by Maghareh, by billing for travel allowance reimbursements that did not reflect the mileage that lab technicians had actually traveled when they collected specimens from nursing home residents in Texas. 

The settlement announced today is designed to resolve BestCare and Maghareh’s outstanding obligation under the 2018 judgment. The settlement provides for payments totaling $5.7 million and the possibility of additional annual payments for five years based on Maghareh’s future income. These payments are in addition to $789,652 that the United States has already collected since 2018. The settlement amount is based on the Justice Department’s ability-to-pay policy.

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The government announced that the whistleblower will receive $1,311,000 of the settlement (a 20% relator’s share of the combined payments).

Comment: The whistleblower filed suit in 2008, and the United States intervened in it in 2011. The District Court awarded summary judgment for over $10 million in 2014 (on theories of unjust enrichment and payment by mistake), and then $30 million in 2018 (under the False Claims Act), which the Fifth Circuit affirmed in February 2020 (see United States ex rel. Drummond v. BestCare Lab. Servs., LLC, 950 F.3d 277 (5th Cir. 2020)). The Government ended up settling the case nearly nine years after the original 2014 judgment for about 60% of that amount (and about 20% of the 2018 judgment).

This case is a good example of how the slowness of the judicial system in handling civil cases, and DOJ’s reluctance or inability to use its remedies under the Federal Debt Collection Procedures Act can frustrate justice. Cases like these — finally resolved almost exactly fifteen years from the date of the whistleblower’s complaint — only dissuade whistleblowers and their attorneys from bringing fraud to the Government’s attention.

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