Health Diagnostic Labs to pay nearly $50 million to settle whistleblower case

Health Diagnostic Laboratory Inc. is reaching a settlement with the U.S. Department of Justice that would settle a whistleblower case examining  the company’s reimbursement practices when doctors order blood tests.  The Wall Street Journal had previously reported that some doctors had received $4,000 a week in reimbursements from HDL for blood samples, and that the lab obtained Medicare payments of $1,000 or more for some bundles of the 28 tests it performs on blood samples, and that the company earned about 41 percent of its $383 million in 2013 revenue from Medicare reimbursements.

Under the terms of the proposed settlement, it will remain eligible for Medicare and Medicaid.

At issue in the case was what is known as  a “safe harbor” exception to the federal anti-kickback statute. Under the anti-kickback law it is generally illegal for a company to pay a physician for business such as lab tests. However,  a vendor selling something to doctors may compensate them for certain related services. However, the payments may not offer financial incentives to send business primarily to the vendor

Jeffrey Newman represents whistleblowers. He does not represent the whistleblower in this case.