Patients Choice Laboratories, False Claims Act Violations, Indiana 2023

Patients Choice Laboratories (“PCL”), a diagnostic laboratory headquartered in Indianapolis, Indiana, has agreed to pay the United States $9,620,000 to resolve allegations that it violated the False Claims Act and the Anti-Kickback Statute (“AKS”).

The government alleges that PCL knowingly submitted claims to Medicare for respiratory pathogen panels (“RPPs”) that were either medically unnecessary or obtained through kickbacks. PCL also paid commissions to independent sales representatives and marketing firms (“1099 representatives”) based on the volume or value of referrals.

Specifically, the United States alleges that on November 20, 2020, PCL entered into a Marketing Services Agreement (“MSA”) with a purported infection prevention company (“the Company”), agreeing to pay $5,000 per month in exchange for “marketing and management services” in long-term care facilities. In reality, according to the United States, the MSA served as a pretext for paying the company for laboratory test referrals, which PCL then billed to Medicare.

The United States further alleges that PCL paid the Company to perform services in long-term care facilities, including specimen collection for infectious disease testing. The Company swabbed residents for COVID-19, and PCL used the same specimens to conduct and bill Medicare for medically unnecessary RPPs. In some cases, PCL billed for RPPs without performing any COVID-19 tests at all.

Between December 1, 2020, and May 11, 2022, PCL paid the Company approximately $1.86 million in exchange for RPP referrals. During that time, PCL billed Medicare for thousands of RPPs conducted at 43 long-term care facilities nationwide, receiving over $6 million in reimbursement.

Additionally, from January 1 to March 31, 2021, PCL contracted with 1099 representatives to promote its laboratory tests to health care providers. The United States alleges that these individuals were not bona fide employees. PCL paid them a percentage of the revenue generated from testing they facilitated. The representatives helped arrange referrals and orders for tests billed to Medicare in violation of the AKS. PCL’s commission payments to these representatives totaled at least $372,000.

“Kickback arrangements that drive unnecessary testing waste taxpayer dollars and undermine the integrity of our healthcare system,” said Tom Wheeler, U.S. Attorney for the Southern District of Indiana. “This settlement reflects our commitment to holding accountable those who seek to profit at the expense of federal healthcare programs and the patients they serve.”

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