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BioReference Pays $10 Million to Settle False Claims Act Case

July 14, 2022

The United States, Massachusetts, and Connecticut have settled a False Claims Act case brought by a client of the Whistleblower Law Collaborative LLC against BioReference Health, LLC and its parent OPKO Health, Inc. for paying kickbacks to physicians to induce referrals. BioReference is one of the largest clinical laboratories in the United States. The Department of Justice and United States Attorney for the District of Massachusetts announced the settlement today. The Massachusetts Attorney General’s Office did as well.

Terms of The BioReference False Claims Act Settlement

Under the terms of the False Claims Act settlement, the defendants will pay $10 million, plus interest. Of that amount, $9,853,958 will be paid to the United States. In addition, defendants will pay a combined total of $146,042 to Massachusetts and Connecticut. Defendants also have entered into a Corporate Integrity Agreement (“CIA”) with the HHS Office of Inspector General (HHS-OIG).

The government alleged that BioReference induced physician practices to send their laboratory business to BioReference by paying them above-market rent. The payments were for BioReference to lease space for its Patient Service Centers (“PSCs”). PSCs are locations where BioReference collects patients’ blood samples for testing. These excessive lease payments violated the Physician Self-Referral Law (commonly known as the Stark Law) and the Anti-Kickback Statute (“AKS”). As the United States Attorney’s Office explained in its press release, “[b]oth the Stark Law and the Anti-Kickback Statute are intended to ensure that physicians’ medical judgments are not compromised by improper financial inducements.” Because of these improper payments, BioReference submitted or caused the submission of false claims for payment to federal healthcare programs.

Medical decisions by doctors should be based on what is best for each patient, not a doctor’s personal financial interest. When companies violate the federal health care laws that are meant to protect patients, health care costs for hard working people increase. We will continue to find fraud and use the False Claims Act to make companies that break the law pay back the taxpayers they defrauded as well as pay a financial price for their misconduct.

United States Attorney Rachael S. Rollins

Defendants admitted that, from January 1, 2013 through March 31, 2021, BioReference made lease payments to physicians and physician practices in numerous states that exceeded fair market value. Those states included Massachusetts and Connecticut. Defendants further admitted that, in deciding whether to open, maintain, or close PSCs, BioReference analyzed referrals from nearby health care providers. Significantly, BioReference considered referrals from many of the physician-lessors who received excessive rent payments. Finally, defendants conducted multiple internal audits that identified excessive lease payments to some physician-lessors. However, they failed to report or return any overpayments to government health care programs.

DOJ, FBI, DoD OIG, and HHS OIG Praise the Settlement

The Federal Bureau of Investigation praised today’s settlement and thanked our client for coming forward:

Laboratories that scheme to enrich their businesses through health care fraud—such as by paying kickbacks—drive up health care costs for everyone. This settlement shows how seriously the FBI takes its responsibility to weed them out, and we’d also like to thank the whistleblower in this case for helping us ensure these entities are held accountable.

Joseph R. Bonavolonta, Special Agent in Charge of the FBI Boston Division

HHS OIG described this settlement as “a warning to laboratories that think they can boost their profits by entering into improper financial arrangements with referring physicians.” Special Agent in Charge Phillip M. Coyne noted that HHS OIG “will continue to crack down on such deals, which work to undermine impartial medical judgement, drive up health care costs, and corrode the public’s trust in the health care system.”

The Defense Criminal Investigative Service, the enforcement arm of the Department of Defense Office of Inspector General stated that health care companies that “pay unlawful remuneration to physicians and submit false claims for improper referrals … undermine the integrity of TRICARE and place an unnecessary financial burden on the program.” Special Agent in Charge Patrick J. Hegarty noted that today’s settlement “demonstrates our ongoing commitment to work with our law enforcement partners to investigate health care fraud and protect TRICARE, the health care system for military members and their dependents.”

The head of DOJ’s Civil Division emphasized:

The integrity of federal health care programs depends on providers making decisions based on the interests of their patients. 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.

Principal Deputy Assistant Attorney General Brian M. Boynton

Our Client Will Receive an Award Under the False Claims Act

Our client provided government prosecutors with information about the alleged fraud. In 2019, we filed a qui tam complaint under federal and state False Claims Acts. Under the False Claims Act, a private citizen (known as a “relator”) who suspects or knows of fraud against the government can act as a whistleblower and file a sealed complaint on behalf of the government. If the case is successful, the relator is entitled to a share – between 15% and 30% – of the government’s recovery.

As this case illustrates, whistleblowers are a critical part of fraud enforcement. Last year, according to DOJ, qui tam cases resulted in over $1.6 billion in False Claims Act recoveries. As DOJ noted, the False Claims Act is one of the government’s most powerful tools to combat health care fraud.

Whistleblower Law Collaborative LLC attorney Linda C. Severin praised the outstanding work of Assistant U.S. Attorneys Alexandra Brazier and Charles Weinograd. “The government attorneys took our client’s allegations seriously and conducted a thorough investigation. Their efforts resulted in this victory for taxpayers and patients.”

WLC attorneys Erica Blachman Hitchings and Suzanne Durrell add their appreciation for WLC’s courageous client who sounded the alarm on this serious issue.

The Whistleblower Law Collaborative is also grateful for the assistance provided by our co-counsel, Lynn Weissberg, formerly of Shapiro, Weissberg & Garin LLP in Boston, Massachusetts.

Whistleblower Law Collaborative

The Whistleblower Law Collaborative LLC, based in Boston, devotes its practice entirely to representing clients nationwide in bringing actions under the federal and state False Claims Acts and other whistleblower programs.  Among the firm’s many successes is a $234 million settlement earlier this year with Mallinckrodt under federal and state False Claims Acts for Medicaid rebate fraud.