Government Settles Another Anti-Kickback Case for $3.75M

Bostwick Laboratories agreed to pay $3,750,000 to the federal government to resolve a False Claims Act violation case from May 2008. According to the qui tam lawsuit, filed by Michael Daugherty, CEO of LabMD, Inc., Bostwick Labs violated the Anti-Kickback Statute when it sent bills to Medicare and Medicaid for unwarranted tests and services. In fact, the suit alleges, the services were performed without a doctor’s order.

Four years after filing the qui tam complaint against the business, Mr. Daugherty amended it to also blow the whistle on Bostwick’s founder, Dr. David G. Bostwick, noting that he was the final decision-maker for the company. The qui tam case alleged that Dr. Bostwick directed his employees to bill the government for tests and services which were never actually provided to patients. Also, he allegedly encouraged his company to offer incentives and other kickbacks to entice physicians to issue more referrals.

The company wanted to settle the lawsuit but announced it could not pay the damages in full. Now, to resolve the case at long last, Dr. Bostwick has agreed to pay more than $2.6 million and another $1.125 million, pending “financial contingencies,” over the next five years.

Under the False Claims Act (FCA), private citizens are encouraged to “blow the whistle” on fraudulent schemes being committed against the United States. In FCA cases, also called qui tam cases, whistleblowers may benefit financially from alerting the government to the fraud.

For more information about the Bostwick settlement, read the Satellite News article, “Former Owner of Bostwick Laboratories Agrees to Pay United States up to $3,750,000 to Settle Allegations That He Directed His Company to Offer Incentives to Physicians in Exchange for Referrals and Bill the Government for Unordered Tests and Service.”


If you believe you have some information that will lead to a whistleblower lawsuit in New Jersey or elsewhere, we encourage you to contact Ross Begelman at Begelman & Orlow, P. C. as soon as possible. We will advise you of your options and, if you do have a qui tam case, we will be by your side throughout every step of the process.

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