DOJ Announces $9.85 Million False Claims Act Settlement Over Above-Market Rent Payments
On July 14, 2022, the United States Department of Justice (DOJ) announced a $9,853,958 settlement with BioReference Health LLC (f/k/a BioReference Laboratories, Inc.) and OPKO Health (parent company of BioReference), resolving allegations of False Claims Act violations. According to the DOJ, BioReference and OPKO paid above-market rents to physician landlords for office space, in an attempt to induce referrals from those physicians to BioReference.
The case was initially brought through the qui tam provisions of the False Claims Act by a former employee of BioReference and OPKO. The relator will receive roughly $1.675 million as their share of the total recovery. In addition to the $9.85 million, the companies will pay the Commonwealth of Massachusetts $141,041 and the State of Connecticut $5,001 to resolve alleged violations of their state False Claims Acts.
According to the DOJ, from January 1, 2013 through March 31, 2021, BioReference made lease payments to physicians and physician groups for office space rentals. The problem is the lease payments exceeded fair market value, which is a violation of both the Physician Self-Referral Law and the Anti-Kickback Statute.
Through the settlement, BioReference admitted that it did rent the office space from the physician practices for “Patient Service Centers,” where patients were able to have their blood drawn. To calculate the rent payment under certain payment service center lease arrangements, BioReference would inaccurately measure the amount of space that BioReference would exclusively use and/or include a disproportionate share of common spaces for which BioReference made payments.
When deciding whether to open, maintain, or close patient service centers, BioReference analyzed the referrals from health care providers that were close by – including the physicians from whom they were leasing the space. In 2015, OPKO acquired BioReference. Subsequently, in 2017 and 2019, the companies conducted several internal audits that showed the rental payments exceeded fair market value. However, neither BioReference nor OPKO reported nor returned any overpayments to federal health care programs.
BioReference has also entered into a Corporate Integrity Agreement with the Department of Health and Human Services Office of Inspector General.
“The integrity of federal health care programs depends on providers making decisions based on the interests of their patients,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “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.”