Health Diagnostic Laboratory Inc. of Virginia became the little lab that could in late 2008 when it collected $383 million in revenue in 2013 mostly from selling tests that could help doctors identify predictors of heart disease. Of that figure, Medicare paid 41 percent.
It was a lucrative project, for a while. It seems HDL was paying doctors $20 for each blood test they ordered for processing at the lab. Sort of a quid pro quo arrangement that encouraged doctors to use HDL’s facility as opposed to other labs that paid doctors far less. The ongoing investigation revealed that some doctors were making several thousands of dollars weekly. To make matters worse, HDL was grouping together a series of 28 tests that could be performed on a single vial of blood and charging Medicare up to $1,000 per group of tests.
HDL had a good thing going and didn’t have to stop until it saw a Special Fraud Alert on June 25, 2014 announcing that the Department of Health and Human Services was cracking down on this exact type of kick-back arrangement. It said it was going to root out instances that it determined presented “a substantial risk of fraud and abuse under the anti-kickback statute.” That’s when HDL dialed back its biomarker business.
A former federal prosecutor on the Medicare Strike Force, Kirk Ogrosky, said HDL was clearly incentivizing doctors. He wondered if the arrangement was giving physicians an incentive to order unnecessary tests.
HDL’s CEO Tonya Mallory maintains, in a statement, that her company “rejects any assertion that we have grown and succeeded as a result of anything other than proper business practices.” It should be noted, however, that many labs, including Quest Diagnostics, don’t offer doctors any compensation for referrals. HDL is complying with the HHS’ investigation.
This story just goes to show that fraud is insidious. It’s not unusual for the perpetrators of a fraudulent scheme against the US government go out of their way to make circumstances look legit. In fact, they can create business cases that to the unsuspecting ear may even sound legitimate.
If you or someone you know is suspicious about a business’ activity, perhaps you think there is a scam of sorts going on, talk to an experienced attorney who can help determine if you truly have a case. Whistleblowers are entitled to a percentage of the money recouped by the federal government in a qui tam investigation. Contact Begelman & Orlow today for a review of your case.