This week, the owner of Biodiagnostic Laboratory Services LLC, a diagnostic lab in Parsippany, NJ, pleaded guilty in Federal Court to healthcare fraud, in connection with illegal payments or kickbacks made to doctors, in exchange for referrals to his lab facility. The plea, following a comprehensive investigation by Federal agencies, demonstrates the serious penalties and stepped up enforcement of Federal and State healthcare laws, including the Anti-Kickback Statute (particularly considering that the government intends to track down and prosecute the other 100 practitioners allegedly also involved in the scheme).
The Anti-Kickback statute prohibits the exchange of anything of value, in an effort to induce the referral of items or services reimbursable under Federal healthcare programs. As evidenced by the recent New Jersey case, these prohibited payments and remuneration can take place in all different forms and methods. In the New Jersey case, the defendant lab testing facility had been making illegal payments to doctors in the form of sham facility leases, payments based on made-up services, and/or payments via consulting agreements that traveled through an elaborate network of shell entities. The fact that the testing lab faced Federal prosecution highlights the fact that the government is wise to the various schemes aimed at indirectly compensating healthcare providers in exchange for referrals.
More than anything, this recent case demonstrates the importance of all healthcare providers – diagnostic labs, pharmacies, and physicians – to not only be aware of the laws and regulations, but also to proactively ensure compliance therewith. Penalties for violations can include civil fines, loss of licensure, exclusion from Federal, State and private healthcare programs, and of course, criminal sanctions. In connection with the plea, the company’s president, several employees, and a physician, face hundreds of thousands of dollars in fines and penalties, as well as up to 22 years in prison. Therefore, practitioners of all kinds should contact experienced healthcare attorneys to make sure they are in compliance and that their arrangements do not violate the law.
