On October 18, 2021, the Department of Justice announced a settlement with Jae Lee, former Chief Executive Officer of Northwest Physicians Laboratory (NWPL). Lee will pay $1.1 million to resolve allegations that the now-defunct NWPL violated the False Claims Act and the Anti-Kickback Statute.
NWPL performed urine toxicology testing and received almost all of its urine specimens from its physician-shareholders. However, NWPL was unable to test urine samples for government health program patients, such as Medicare and Medicaid patients, as it was physician-owned.
The DOJ alleged that Sterling Healthcare Opco, LLC d/b/a Cordant Health Solutions (Cordant) and Molecular Testing Labs (MTL) made payments to NWPL in exchange for referrals of Medicare and TRICARE program business. Essentially the scheme was that NWPL referred patients who were on government-healthcare programs to Cordant and MTL, who in turn, paid kickbacks to NWPL. In an attempt to conceal the kickbacks, the three companies described the fees as “marketing services,” despite no marketing services being performed.
According to the original indictment, NWPL received up to $100,000 per month in exchange for those referrals. MTL allegedly paid $450,000 to NWPL and billed the government more than $2 million.
Lee will pay $500,000 within 30 days of the settlement agreement and make annual payments until payment in full is made. The whistleblower is expected to receive 15% of the settlement, as is common in qui tam cases.
NWPL was also sentenced in May 2021 as a corporate entity, and ordered to pay more than $8 million in restitution, joint and several with other defendants. Jae Lee, as CEO and an owner of NWPL, was listed as an individual defendant in the initial indictment. Other defendants include Richard W. Reid, the lead sales officer for NWPL, and Kevin W. Puls, Executive Director of NWPL beginning in 2014.
Cordant and MTL previously reached settlements with the DOJ for their roles in the scheme (reaching $12 million– and $1.7 million-dollar settlements, respectively). The criminal case surrounding the kickback scheme continues, with sentencing trials scheduled next year.
“Resolving this civil case, as well as Mr. Lee’s guilty plea in the criminal case last year, are major milestones in this health care fraud investigation,” said U.S. Attorney Nicholas W. Brown. “The Anti-Kickback statute is aimed at protecting the public by keeping fraud from inflating our health care costs. When, as in this case, a whistleblower brings fraud to our attention the U.S. Attorney’s Office will vigorously pursue an investigation.”