When it comes to the healthcare sector, the Justice Department and the HHS-Office of Inspector General have no shortage of investigations and targets for prosecution.  The more resources made available to DOJ and HHS-OIG, the more money made for the federal government from medical care fraud.  It is a very simple equation.  It is like shooting fish in a barrel.

BioReference and OPKO Health, Inc. agreed to pay $9.85 million to resolve False Claims Act violation stemming from BioReference’s payment of above-market rents to physician landlords for office space in order to induce referrals from those physicians to BioReference, which is a subsidiary of OPKO and one of the largest clinical laboratories in the United States.

Between January 2013 and March 2021, BioReference made lease payments to physicians and physician groups to rent office space that exceeded fair market value in violation of the Anti-Kickback Statute and the Stark Physician Self-Referral Law. 

The AKS law prohibits offering or paying remuneration to induce the referral of items or services covered by federal healthcare program.  The Stark Law prohibits a healthcare provide from billing for certain services referred by physicians with whom the provider has a financial relationship.  Both of these laws are intended to preserve physicians’ independent judgment as to the appropriate medical care for patients and prevent improper consideration of benefits and payments from other interested parties.

BioReference rented the office space from the specified physician practices for Patient Service Centers (“PCS”) where patients could have blood samples taken.  In calculating the payments to the physicians, BioReference took  account of the number of referrals made by specific physicians linked to specific PSC locations.  After that, BioReference calculated the lease payments to the physicians for these PSC locations by inaccurately measuring the amount of space it would use and a disproportionate share of common spaces.  This formula allowed BioReference to pay above market value and reward and incentivize physicians to increase referrals to BioReference linked PSCs in the area.

Following OPKO’s acquisition of BioReference, multiple internal audits conducted during the period 2017 to 2019 confirmed that the payments to the physicians exceeded fair market value.  Notwithstanding these internal audit findings, BioReference did not report the matter to HHS nor return any overpayments to federal healthcare programs.

As part of the resolution, BioReference entered into a Corporate Integrity Agreement (“CIA”) with HHS-OIG.

The allegations were initially lodged by a whistleblower, a former employee at BioReference and OPKO, under the qui tam whistleblower program.  The whistleblower received a payment of approximately $1.7 million as her share of the recovery.  Under the settlement, the defendants will pay the Commonwealth of Massachusetts and the State of Connecticut, $141,041 and $5,001, respectively.