In a recent Medicare fraud and abuse whistleblower lawsuit, three former executives for a medical lab were found liable for committing millions of dollars worth of Medicare fraud by a South Carolina jury.

The three former employees of Health Diagnostics Laboratory were held responsible by a South Carolina jury for about $17 million of Medicare fraud and abuse. Under the False Claims Act, this amount will be tripled to $51.2 million.

Allegedly, former Health Diagnostics Laboratory executive Latonya Mallory and two marketing consultants, Floyd Dent III and Robert Johnson, engaged in illegal practices which included Medicare fraud and abuse.

Mallory, Dent, and Johnson allegedly conspired to pay physicians a $20 kickback every time certain doctors referred patients to get test work done at Health Diagnostics Laboratory. According to Law360, these former employees encouraged doctors to refer their patients for bloodwork and other tests and then, paid them kickbacks for doing so.

Allegedly, doctors ordered more than 35,000 unnecessary tests. Most of these false claims were linked to Health Diagnostics Laboratory (about $16.6 million worth) and some were linked with other medical labs.

Mallory was the CEO for Health Diagnostics Laboratory and Dent and Johnson worked for BlueWave Healthcare Consultants, a sales company formed by the two after they left the parent company for both HDL and BlueWave, Berkeley Health.

BlueWave and Health Diagnostics Laboratory employees worked together to allegedly scam thousands of people into thinking they needed certain cardiovascular tests, many of which were unnecessary.

One of the attorneys for defense said of the medical lab, “they initially, perhaps innocently, were following bad advice from counsel, ” because they continued to “to pay kickbacks even after they received a growing flood of warnings and corrected legal advice.”

Initially, the jury was requested by the Department of Justice to ask for $174 million. However, the jury handed down the final Medicare fraud and abuse verdict for almost $17 million. This only makes up about ten percent of what the DOJ wanted.

Additional fines to be added to the $51 million include penalties of $5,500 to 11,000 for every false claim. With over 35,000 unnecessary tests, this additional amount could be significant.

As a part of this Medicare fraud and abuse scandal, both BlueWave and HDL were allegedly complicit in cheating the government of millions of dollars by communicating to doctors that their patients would never be billed for services.

In essence, if the doctors ordered the unnecessary tests, sent the patients to HDL for testing, HDL would bill the government, pay the doctors a kickback, but never bill the patients (or so they were told) for said medical tests.

It was pitched as a win-win for every party involved, except, it would seem, for the government. In one year alone, 2012, Healthcare Diagnostics Laboratory wrote off $208 million in “adjustments for noncollectable accounts,” or what the patients would have been billed.

In this Medicare fraud and abuse scandal, other laboratories were implicated including Quest Diagnostics.

These Medicare Fraud and Abuse Lawsuits include U.S. ex rel. Mayes v. Berkeley HeartLab Inc. et al., Case No. 9:11-cv-01593, and U.S. ex rel. Lutz et al. v. Health Diagnostic Laboratory Inc. et al., Case No. 9:14-cv-00230, in the U.S. District Court for the District of South Carolina.