Diagnostic Laboratories and Radiology (DLR) in Burbank, California has agreed to pay $19.4 million to the California and federal governments and to two former employees to settle a lawsuit that alleged the company provided kickbacks to skilled nursing facilities (SNFs).
The qui tam suit, which I first wrote about in June 2012, was brought by two former employees of DLR who claimed DLR was charging SNFs as much as 80% below market value for lab testing, so as to effect referrals for Medi-Cal and Medicare patients. This work was then charged to the state and federal health care programs at the usual and customary rate.
The employees further claim they were fired from DLR after they reported the billing practice in question to the authorities.
DLR, which is now owned by Trident USA, claims it would have been acquitted at trial (which was scheduled for next week), but chose to settle so as to avoid further litigation expense.
The settlement will be divided up as follows: $12.95 million to the federal government, $4.55 million to California and $1.9 million to the plaintiff attorneys. The two former employees will split at least $3.5 million between the two of them.
Not surprisingly, the billing practices alleged in this suit are not new.
Chris Riedel of Hunter Laboratories made essentially identical allegations in his suit against Quest Diagnostics and LabCorp that ended in 2011 with Quest and LabCorp agreeing to pay $241 million and $49.5 million, respectively, to settle the case.
In addition, two other whistleblower suits against Quest and LabCorp with the same allegations (again filed by Mr. Riedel) in Georgia and Virginia were just unsealed earlier this month.
Lastly, the September 2013 edition of Laboratory Economics reports Mr. Riedel has additional whistleblower suits pending against Quest Diagnostics in Michigan, Nevada and Massachusetts, presumably with similar allegations.