A hospital in Alabama recently negotiated a whistleblower settlement to resolve accusations of paying kickbacks with the aim of getting more referrals for toxicology lab tests to a subsidiary lab.

East Alabama Medical Center agreed to dispense $4.3 million with this whistleblower settlement in order to avoid lengthy and expensive litigation.

According to an article posted by Law360 this September, the complainant that filed the lawsuit leading to the whistleblower settlement was Leamon F., a former laboratory assistant at the Medical Center. Allegedly unable to get a response from his supervisors when he attempted to register a complaint about this purported misconduct, Leamon decided to file his lawsuit in late summer of 2013.

Kickback Claims

In his whistleblower lawsuit, Leamon claimed that the Medical Center and subsidiary lab violated the federal False Claims Act (FCA) by paying two marketing companies to funnel physician requests for toxicology tests to Aperian Laboratory Solutions LLC—a named defendant in the case.

The complainant indicated when he filed his lawsuit in the U.S. District Court for the Northern District of Alabama that these marketing commissions were in direct violation of the FCA and the Anti-Kickback Statute. The law specifies that there can be no exchange of monies or items of value given to secure referrals for services which can then be billed to public health programs like Medicare and Medicaid.

The two marketing companies which were purported to be part of this scheme include Summit Diagnostics and Compass Laboratory Solutions.

Prior to the whistleblower settlement being offered by the Medical Center and Aperian, both marketing agencies agreed to pay out $2 million to clear their names for their alleged participation in the kickback arrangement. Both agencies claim that they are innocent of the charges against them but wish to avoid costly involuntary participation in the litigation. There has been no finding of wrongdoing in a court of law against them.

Aperian Laboratory Solutions likewise admits no wrongdoing in offering this whistleblower settlement. The Medical Center subsidiary working in partnership with the hospital merely desires to circumvent the expensive burden of defending itself in court.

Prior to the $4.3 million whistleblower settlement, the hospital and laboratory had settled prior specific claims related to the case for $500,000.

Whistleblower Lawsuits

Under the False Claims Act, the government empowers ordinary citizens to be on the look out for instances where public programs are being falsely billed or charged for medical services. Under the Act’s qui tam provision, it allows plaintiffs to initiate a lawsuit on the government’s behalf which can then be taken up or declined by the same.

In whistleblower lawsuits, plaintiffs receive a portion of the settlements. In this case, the government declined to get involved in the complaint, but Leamon is still allowed a portion of the whistleblower settlement for his role in bringing the allegations to light. The law firm representing the plaintiff, according to Law360, has not revealed the amount that will be forthcoming to him.