On Monday, September 8th, former CEO of True Health Diagnostics, Christopher Grottenthaler, agreed to pay $4.25 million to resolve False Claims Act violations following alleged illegal payments to doctors in return for laboratory referrals. Two physicians and seven marketers have contributed an additional $1,818,462 to settle the allegations, which were brought forward by a qui tam whistleblower under the False Claims Act.
The False Claims Act (FCA) prohibits fraud committed by government contractors, penalizing individuals who knowingly submit false claims to the government.
The whistleblowers alleged Grottenthaler violated the Anti-Kickback Statute. This statute prohibits paying or soliciting to induce referrals of items or services covered by federally funded healthcare programs. The Anti-Kickback Statute seeks to ensure that medical providers are not compromised by financial incentives.
The alleged kickback scheme occurred between January 2015 and May 2018, involving the inducement of doctors’ laboratory testing referrals. The two physicians in the settlement are alleged to have received thousands of dollars in return for ordering laboratory tests while the seven marketers are alleged to have paid kickbacks disguised as managed service organization investment distributions.
“Laboratory testing is an essential part of patient care,” urges Deputy Inspector General for Investigations Christian J. Schrank of the Department of Health and Human Services, “not a vehicle for greed and exploitation.”
The lawsuit was filed by qui tam whistleblowers. The False Claims Act’s qui tam provisions enable private citizens and private parties to file lawsuits on behalf of the government if they know of an individual or company defrauding the government. Qui tam whistleblowers are eligible to receive between 15% and 30% of the government’s recovery. In this case, the whistleblowers will receive a $148,750 share of the FCA settlement.
Assistant Attorney General Brett Shumate states, “The Department of Justice will continue to pursue and prioritize healthcare fraud, including redressing illegal kickbacks.”
So far, the Department of Justice has secured over $59 million in False Claims Act settlements for kickbacks to healthcare providers.
The Department of Justice and the Department of Health and Human Services recently announced the re-establishment of their FCA working group to target healthcare fraud, demonstrating their commitment to combating corruption in the healthcare industry. This case highlights those new priorities, as well as an emphasis on utilizing whistleblowers and the False Claims Act, “One of the most powerful tools in this effort”.
The claims resolved by settlement agreement are allegations only. There has been no determination of liability.