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Laboratory COVID-19 Fraud-A Whistleblowers Guide

The COVID-19 Pandemic has been a boom for laboratories—many saw their business increase by more than 1,000% or more. And, while most labs are honest, many cheated to maximize profits at taxpayer expense. Employees who work at labs often suspect rule violations--but are unclear if they can get in trouble for participating in things such as overbilling Medicare or Medicaid. Here are the answers to common requests about laboratory fraud arising out of the COVID-19 Pandemic:

Q. Can my lab provide discounts in exchange for more business?

A. Typically, no. Labs get in trouble when they disguise kickbacks (for example promises of future business) in the form of lower prices, agreeing to forgive debt, or otherwise benefiting customers. The Office of the Inspector General has explained in a special fraud alert relating to the False Claims that that whenever a laboratory offers or gives to a source of referrals anything of value not paid for at fair market value, the inference may be made that the thing of value is offered to induce the referral of business.

Q. Can my lab pay transaction fees, specimen fees, investment returns, or case fees?

A. It depends. Again, if these transactions are done to influence getting business, not done at fair market value, etc., then they can violate the False Claims Act, EKRA or other laws. The Anti-Kickback Statute prohibits offering, paying, soliciting, or receiving remuneration to induce referrals of items or services covered by Medicare, Medicaid, and other federally funded programs. The Stark Law forbids a laboratory from billing Medicare and Medicaid for certain services referred by physicians that have a financial relationship with the laboratory. The Anti-Kickback Statute and the Stark Law are intended to ensure that medical providers’ judgments are not compromised by improper financial incentives and are instead based on the best interests of their patients.

  1. Can my healthcare company do business with family members if they refer business?
  1. Often doing business with family in the healthcare space is problematic. The Stark law prohibits a doctor’s referral if the physician (or a member of the physician’s immediate family) has a financial relationship with the entity, unless the referral is protected by one or more exceptions provided in the law The Stark Law is a strict liability statute and requires no scienter/intent. A person or entity found to be in violation of the Stark Law is subject to civil and administrative sanctions, including exclusion from participation in federal health care programs.
  1. Can my lab provide free/below market goods services?
  1. Typically, no. There have been cases involving discounted or free products that are viewed as hidden kickbacks in exchange for business. The OIG has explained that arrangements in which laboratories provide free or below-market goods or services to physicians or make payments to physicians that are not commercially reasonable in the absence of Federal health care program referrals potentially raise four major concerns typically associated with kickbacks—corruption of medical judgment, overutilization, increased costs to the Federal health care programs and beneficiaries, and unfair competition. The reasoning is that this may cause more tests than necessary & the OIG has explained that doctors (and usually not patients) make the choice of laboratory.
  1. Can I personally be liable for healthcare fraud even if I am not an owner of the lab where I work?
  1. Yes, the Department of Justice casts a wide net in terms of who is liable for False Claims Act, Stark and other healthcare fraud related activity. One of the best ways to avoid personal civil or criminal liability, it to be advised by an experienced whistleblower lawyer. In many cases, even individuals who were aware of and participated in the fraud can avoid liability by cooperating with the government. It is important to be transparent regarding reporting healthcare fraud.

Q. How do I find a good whistleblower attorney?

A. There are many outstanding whistleblower lawyers. Some thoughts on picking the best for you are:

First, make sure you are working with a whistleblower lawyer who has experience. Do not be afraid to ask them about other whistleblower cases they have handled.

Second, make you are working with a firm that has the bandwidth to handle your case; ask how busy they are and whether they can devote sufficient time and resources to your case. Some larger firms may feel your case is not as important as one involving billions of dollars in damages. Some smaller firms may not have the resources to pursue your qui tam case. Ask how many other whistleblower cases they are handling.

Third, and perhaps most important, make sure you have a good connection with the lawyers handling your qui tam/whistleblower case. Do they seem to treat you as a “case” or a human? Are they empathetic to your needs—like the emotional trauma associated with being a whistleblower.

Fourth, ask whether they will pursue the case if the government declines to intervene. As the government has limited resources, there is a good chance you will be left pursuing your case on your own. Will your law firm dump you at that point? While most firms will not commit to this up front, ask how often the firm prosecutes non-intervened cases.

Fifth, consider the whistleblower law firm’s location. If you have to jump on an airplane every time there is an important meeting, that is a negative. Furthermore, local whistleblower lawyers are more likely to know the local rules and customs of the local courthouse.