Biotechnology Company Settles False Claims Act Charges for $11.5 million
The Acting U.S. Attorney for the Southern District of New York announced a settlement with Bio-Reference Laboratories, Inc. (“BRL”), a New Jersey-based biotechnology company, on September 22, 2020. The settlement resolves allegations that BRL engaged in fraudulent billing practices and received kickbacks from 2009 to 2012.
According to the Complaint, BRL, which provides diagnostic and molecular tests, fraudulently billed Medicare and Tricare for testing that it performed for hospital inpatients when the hospitals should have paid for the testing. Hospitals receive payments from federally funded programs for all services provided to patients under the inpatient prospective payment system (unless an exemption applies). BRL, however, admitted that it billed Medicare and Tricare even though BRL management knew that it should bill hospitals.
As part of the settlement, BRL also admitted that it violated the Anti-Kickback Statute. BRL acknowledged that from 2009 through 2012, it paid a percentage of the cost of electronic medical records software to doctors, based on the volume of business the doctor generated, to induce them to use BRL’s services. BRL offered this arrangement to 69 different doctors’ offices.
To settle the case, BRL agreed to pay $1,396,386 in connection with the inpatient testing claims and $10,104,574 to resolve the software kickback claims. Additionally, BRL made many admissions regarding its conduct. The government joined two whistleblower lawsuits that were previously filed under seal pursuant to the False Claims Act in connection with the filing of the lawsuit and settlement.
The Southern District of New York’s press release detailing the settlement can be found here.
SEC Settles Charges Against Day-Trader who Targeted Air Force Cadets
On September 21, 2020, the Securities and Exchange Commission (“SEC”) announced that it settled charges against a supposed Colorado-based securities professional for defrauding investors. According to the complaint, the defendant misled investors about his trading activities and raised almost $100,000 from over 40 investors under the pretense that he would day-trade stocks using their investments. The complaint alleges that the defendant met many of the investors through car club events, including a U.S. Air Force Academy cadet who the defendant used to meet other cadets.
The SEC claimed that the defendant told investors that they could expect returns up to ten percent with little risk involved. Although the defendant allegedly used fake stockbroker agreements and phony account balances for some investors, the SEC contended he actually used the investor funds for personal expenses and paid back prior investors with the new investor funds.
The Regional Director for the SEC’s Denver Office emphasized that the SEC would “vigilantly pursue fraudsters who prey upon those who serve our nation.” The Defendant consented to a final judgment permanently enjoining him from violating the antifraud and broker-dealer registration provisions of the federal securities law, agreed to return over $51,000 of the allegedly ill-gotten gains, pay prejudgment interest, and to pay another $51,633 in a civil penalty.
The SEC’s press release is here.