A federal judge ordered the former CEO of a diagnostic laboratory and two others to pay $114 million for doling out kickbacks to doctors who referred patients to their business for unnecessary tests.
LaTonya Mallory, former CEO of Richmond, Va.-based blood testing laboratory Health Diagnostics Laboratory, Floyd Calhoun Dent III and Robert Bradford Johnson paid doctors between $10 and $17 for each patient they referred to the laboratories, disguising the payments as processing and handling fees, according to the U.S. Justice Department.
Dent and Johnson sold lab tests for Health Diagnostics and another blood test lab, Alameda, Calif.-based Singulex.
Christopher Kovach, an attorney representing Dent and Johnson, said he and his clients are disappointed in the ruling and plan to appeal.
"We continue to believe the claims of the government and relators are without merit and look forward to appellate court review," he said.
An attorney representing Mallory did not respond to a request for comment.
A federal jury in South Carolina determined in January that Mallory, Johnson and Dent caused Health Diagnostics to submit about 35,000 false claims worth $16.6 million to Medicare and Tricare. Johnson and Dent were also found liable for another 3,800 claims by Singulex worth $468,000. That violated the False Claims Act and Anti-Kickback Statute.
Under the judgment last week, all three defendants are ordered to pay $111 million, and Johnson and Dent must pay an additional $3 million.
"Improper financial relationships between physicians and laboratories can distort a physicians' best judgment for their patients, in addition to undermining patient health and trust," Chad Readler, acting assistant attorney general for the Justice Department's Civil Division, wrote in a statement. "Executives and other individuals who break the law will be held personally accountable for their actions."
Four whistle-blowers alerted the federal government to the claims with False Claims Act lawsuits.