Bostwick Laboratories (Uniondale, N.Y.) will pay more than $6 million to settle a whistleblower lawsuit alleging the lab inappropriately billed federal health programs for laboratory tests. The qui tam complaint was filed in May 2008 by Michael Daugherty, president of LabMD. Although the federal government in June 2011 decided not to intervene in the case, a senior district court judge in 2012 denied Bostwick’s motions to dismiss. The settlement does not resolve allegations against David Bostwick, M.D., who is a separate defendant in the case. These charges are still pending, and Dr. Bostwick is expected to go to trial in late 2015. Specifically, Daugherty alleged that Bostwick Laboratories routinely performed fluorescence in situ hybridization (FISH) testing on atypical urine cytology cases whether or not the referring physician had ordered FISH testing and then billed the government for the tests. The lawsuit alleged that Bostwick performed both the professional and technical component of FISH testing but allowed referring physicians to bill for the professional component. Daugherty also alleged that Bostwick further induced physicians to send it testing by using a client billing scheme, whereby Bostwick charged the referring physicians a reduced amount for the FISH technical component. This allowed the referring […]
Bostwick Laboratories (Uniondale, N.Y.) will pay more than $6 million to settle a whistleblower lawsuit alleging the lab inappropriately billed federal health programs for laboratory tests.
The qui tam complaint was filed in May 2008 by Michael Daugherty, president of LabMD. Although the federal government in June 2011 decided not to intervene in the case, a senior district court judge in 2012 denied Bostwick’s motions to dismiss.
The settlement does not resolve allegations against David Bostwick, M.D., who is a separate defendant in the case. These charges are still pending, and Dr. Bostwick is expected to go to trial in late 2015.
Specifically, Daugherty alleged that Bostwick Laboratories routinely performed fluorescence in situ hybridization (FISH) testing on atypical urine cytology cases whether or not the referring physician had ordered FISH testing and then billed the government for the tests.
The lawsuit alleged that Bostwick performed both the professional and technical component of FISH testing but allowed referring physicians to bill for the professional component. Daugherty also alleged that Bostwick further induced physicians to send it testing by using a client billing scheme, whereby Bostwick charged the referring physicians a reduced amount for the FISH technical component. This allowed the referring physicians to mark up the test and bill Medicare for the full amount.
In a 2012 order denying Bostwick’s motion to dismiss the case, Judge Arthur Spiegel said Bostwick’s actions amounted to an inducement in violation of the anti-kickback statute and the Stark law.
In a statement released by Bostwick, the lab says it disagrees with and does not admit the allegations but agreed to settle the matters to put them behind it and to avoid the delay, uncertainty, and expense of protracted litigation.
“Bostwick Laboratories conducts its business with the highest standards of quality and integrity,” said Jerry Diffley, vice president and chief compliance officer. “This global settlement resolves several longstanding issues and enables us to focus on our company’s future, rather than the past. We remain strongly committed to compliance with the rules and regulations that govern our business practices, and we continue to have a robust compliance program in place.”
Takeaway: Allegations of False Claims Act violations can cost a laboratory a lot of money, even if the claims are not proven. The best defense against such allegations is a thorough and comprehensive compliance program.
