On September 25, 2013, the Department of Justice announced that Kan-Di-Ki LLC, doing business as Diagnostic Laboratories and Radiology, will pay $17.5 million to settle claims that the company fraudulently billed Medicare and California’s Medicaid program (Medi-Cal). Specifically, it was alleged that the company billed Medicare and Medi-Cal for services referred to the company as a result of kickbacks, thereby violating the federal False Claims Act and the California False Claims Act. According to the Department of Justice: “Diagnostic Labs allegedly took advantage of Medicare’s different 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.” The case was brought by two former employees of Diagnostic Labs. The two relators received a total award of over $3 million as a result of the settlement. The full DOJ press release can be found here.
The payment of kickbacks for patient referrals is in violation of the Federal Anti-Kickback Statute. Government programs, such as Medicare, will not pay for services that have been referred to healthcare providers as a result of kickbacks, and, therefore, such claims for payment are considered false under the False Claims Act. Despite the clear illegality, kickback fraud is all too common.
If you believe that you have a False Claims Act case, please contact the Rabon Law Firm.