A South Carolina jury found three individuals liable for violations of the Federal False Claims Act (FCA) in a qui tam whistleblower action in which DOJ intervened. The defendants, owners of a specialized laboratory company and an affiliated marketing company, were found to have operated a scheme to pay kickbacks to physicians for laboratory test referrals.

The defendants paid referring physicians “process and handling” fees ranging from $10 to $20 for each laboratory test ordered. The whistleblowers and DOJ alleged that these payments were made to induce referrals and therefore constituted illegal kickbacks prohibited under the federal Anti-Kickback Statute, meaning that all Medicare and TRICARE claims for which these payments were made were submitted in violation of the FCA.

All three defendants were found jointly and severally liable for submitting over 35,000 false claims worth over $16.6 million. Two of the defendants were also found liable for submitting over 3,000 false claims worth over $400,000. Under the FCA, these amounts are automatically trebled, resulting in potential total liability of over $50 million.

The case is United States ex rel. Lutz v. BlueWave Healthcare Consultants Inc., No. 9:14-cv-00230-RMG (D.S.C.). A copy of DOJ’s Complaint in Intervention is available here.