Last week we posted a comprehensive look at the increased scrutiny into laboratories that engage in referrals with physician practices. That article looked at the (forthcoming) multi-million dollar settlement between the Department of Justice and Health Diagnostic Laboratories to settle an investigation into the lab’s practice of paying physicians to send their patients’ blood for testing. A new crop of enforcement actions, however, implicate the group on the other side of the referral equation: doctors.
On April 2, the Office of Inspector General announced two enforcement actions against doctors for their relationship with a New Jersey-based lab. The U.S. Attorney’s Office for the District of New Jersey is in charge of the cases and stated that the two doctors accepted bribes in exchange for “test referrals as part of a long-running and elaborate scheme operated by Biodiagnostic Laboratory Services LLC (BLS), of Parsippany, New Jersey.”
View the DOJ press releases: Here and Here
Brett Halper of Glen Head, New York, pleaded guilty before U.S. District Judge Stanley R. Chesler in Newark federal court to one count of accepting bribes. “Including Halper, 38 people – 26 of them doctors – have pleaded guilty in connection with the bribery scheme, which its organizers have admitted involved millions of dollars in bribes and resulted in more than $100 million in payments to BLS from Medicare and various private insurance companies,” states DOJ. “The investigation has so far recovered more than $10.5 million to date through forfeiture.”
According to documents filed in this and related cases and statements made in court, Halper admitted that from January 2011 through April 2013, he accepted bribes in return for referring patient blood specimens to BLS and was often paid in excess of $5,000 per month. Halper’s referrals generated approximately $2,900,000 in lab business for BLS. The bribery count to which Halper pleaded guilty carries a maximum potential penalty of five years in prison and a $250,000 fine. Sentencing is scheduled for June 30, 2015.
Angelo Calabrese of Pine Brook, New Jersey, previously pleaded guilty before U.S. District Judge Stanley R. Chesler to a one count of accepting bribes. Judge Chesler imposed the sentence today in Newark federal court. Calabrese admitted accepting more than $130,000 in bribes to refer at least $600,000 in lab business to BLS. From 2010 through 2013, Calabrese received over $4,500 per month from BLS through sham consulting and rental agreements. In addition to the prison term, Judge Chesler sentenced Calabrese to serve one year of supervised release and ordered him to pay a fine of $5,000. As part of his guilty plea, Calabrese must forfeit $334,000.
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When it comes to laboratory referral arrangements, the government has stated that their main concern is that physicians will do business with the lab that pays the most, rather than the best lab, and that physicians would order tests that are not medically necessary, particularly if the payment arrangement is tied to the number of referred tests.
This concern has manifested itself in a constant stream of enforcement actions and alerts. Since last year, the government has:
- Published a Special Fraud Alert on Laboratory Payments to Referring Physicians, which addresses compensation paid by labs to referring physicians and physician group practices for blood specimen collection, processing, and packaging, and for submitting patient data to a registry or database.
- Prosecuted several physicians for accepting payments from labs for referrals
- Engaged in a high-profile investigation of Health Diagnostic Laboratories, Inc. over the payment practices
- Issued Advisory Opinion 15-04, which found that an exclusive arrangement between a laboratory and its referring physician practices could violate the Anti-Kickback statute.
This is clearly an area of interest.