In a critical development against healthcare fraud, several Southern California-based clinics, a laboratory, and their owners have agreed to pay $10 million to settle allegations of submitting false claims to Medicare and Medi-Cal. The settlement in this case demonstrates the government’s commitment to protecting the integrity of federal healthcare programs and addressing violations involving kickbacks and self-referrals. The laboratory fraud case is important because it provides great insight into how laboratory fraud works, and the legal frameworks used to fight such practices.
Entities Involved
The parties in this case are Dr. Mohammad Rasekhi, Sheila Busheri, Southern California Medical Center, and Universal Diagnostic Laboratories.
Dr. Mohammad Rasekhi founded and served as Chief Medical Officer of SCMC and was a co-owner of UDL along with Sheila Busheri, who served as SCMC’s Chief Executive Officer and UDL’s CEO. SCMC is a federally qualified health center that operates six clinics in Southern California. UDL is a reference and esoteric laboratory offering diagnostic services throughout the region.
Allegations of Fraud
The laboratory fraud case allegations centered on violations of federal laws aimed at preventing fraudulent practices in healthcare. According to the Department of Justice, the parties engaged in the following unlawful practices:
Kickbacks to Marketers
SCMC and UDL allegedly paid marketers to refer Medicare and Medi-Cal beneficiaries to SCMC clinics. This practice violates the Anti-Kickback Statute (AKS), which prohibits offering or receiving remuneration to induce referrals for services covered by federal healthcare programs.
Kickbacks to Third-Party Clinics
UDL provided incentives such as above-market rent payments, complimentary or discounted services to clinic staff, and waived balances owed by patients and clinic staff in exchange for laboratory test referrals. These actions also breached the AKS.
Self-Referrals
The case involved self-referrals, where SCMC directed patients to UDL for laboratory services. This conduct contravenes the Stark Law, which forbids physicians from referring patients for designated health services to entities with which they have a financial relationship unless specific exceptions apply.
Legal Framework
The enforcement of federal healthcare laws was central to this case, particularly the Anti-Kickback Statute (AKS) and the Stark Law.
Anti-Kickback Statute (AKS)
Enacted to safeguard federal healthcare programs from corruption, the AKS imposes civil and criminal penalties on individuals and entities that exchange anything of value to encourage or reward referrals for federally funded services.
Stark Law (Physician Self-Referral Law)
The Stark Law aims to prevent conflicts of interest in medical decision-making by prohibiting physicians from referring patients to entities with which they have financial ties, unless specific exemptions apply.
Settlement and its Implications
The defendants agreed to pay $10 million to settle the allegations and avoid further litigation. This settlement represents the serious financial and reputational consequences of engaging in schemes to defraud the health care system. It serves as a warning to health care providers of the seriousness with which noncompliance with federal laws designed to ensure integrity and protect federal funds is treated.
Role of Whistleblowers in Exposing Fraud
It again indicates how important whistleblowing under the False Claims Act has been in surfacing schemes of fraud. The FCA’s qui tam provisions allow private persons to file qui tam actions on behalf of the government, incentivizing inside whistleblowers. Therein also lies an important effect on the general landscape: one of effective detection and prosecution of fraud by the government.
Conclusion
The $10 million settlement by Southern California clinics and laboratories underlines the importance of compliance with federal healthcare laws. Cases like this show the government’s commitment to rooting out fraud and protecting public funds, while it also shows the important role that whistleblowers can play in promoting accountability. As fraud in laboratories continues to threaten the integrity of healthcare, adherence to the statutes such as the Anti-Kickback Statute and Stark Law becomes of essence. This case reminds organizations that violations also have significant fiscal and legal outcomes, thus vigilant practices and a code of ethics must be developed within the entire healthcare industry.