Two former lab employees will share $3,755,500 as their reward for filing a whistleblower lawsuit exposing fraudulent Medicare billing practices at Diagnostic Laboratories and Radiology (Diagnostic Labs), a facility operated by Kan-Di-Ki LLC, formerly known as Kan-Di-Ki Inc.
Diagnostic Labs will pay $17.5 million to settle the whistleblowers’ allegations that the California-based company violated the federal and California False Claims Acts by paying kickbacks for referrals of mobile lab and radiology services subsequently billed to Medicare and Medi-Cal (the state of California’s Medicaid program).
Diagnostic Labs allegedly manipulated Medicare’s reimbursement system for inpatient and outpatient services by charging Skilled Nursing Facilities (SNFs) in California discounted rates for inpatient services paid by Medicare in exchange for the facilities’ referral of outpatient business to Diagnostic Labs. For inpatient services, Medicare pays a fixed rate based on the patient’s diagnosis, regardless of specific services provided. For outpatients, Medicare pays for each service separately. Diagnostic Labs’ scheme enabled the SNFs to maximize profit earned for providing inpatient services by decreasing SNFs’ costs of providing these services. It also allegedly allowed Diagnostic Labs to obtain a steady stream of lucrative outpatient referrals that it could directly bill to Medicare and Medi-Cal. The provision of inducements, including discounted rates, to generate referrals is prohibited by federal and state law.
For more information on this case, click here: http://www.justice.gov/opa/pr/2013/September/13-civ-1068.html