NEW YORK – The US Department of Justice earlier this month said that California-based Universal Diagnostic Laboratories and Rapid Health have agreed to pay millions to settle fraud allegations in two separate cases.
Mohammad Rasekhi, Sheila Busheri, Southern California Medical Center (SCMC) and R & B Medical Group, doing business as Universal Diagnostic Laboratories (UDL), have agreed to pay $10 million to resolve allegations that they submitted false claims to Medicare and California's Medicaid program by paying kickbacks and making self-referrals.
The defendants allegedly paid kickbacks to marketers to refer Medicare and Medi-Cal beneficiaries to SCMC and paying kickbacks to third-party clinics in the form of above-market rent payments, complimentary and discounted services to clinic staff, and write-offs of balances owed by patients and clinic staff in exchange for referring Medicare and Medi-Cal beneficiaries to UDL for laboratory tests.
The defendants also allegedly referred beneficiaries from SCMC clinicals to UDL for laboratory tests in violation of the Stark Act prohibition against self-referrals, the DOJ said in a statement.
The settlement also partially resolves claims brought by four whistleblowers who were former employees of SCMC and UDL. The whistleblowers reached a separate settlement with the defendants for $5 million to resolve additional allegations in their complaint.
In a separate case, Covid Test DMV, doing business as Rapid Health, has agreed to pay $8.2 million to resolve allegations that it submitted false claims to Medicare for over-the-counter COVID-19 tests that weren't provided to Medicare beneficiaries.
From April 2022 to May 2023, Rapid Health, a pharmacy, distributed OTC COVID-19 tests as part of the US Centers for Medicare and Medicaid Services OTC COVID-19 Test Demonstration Project. During the project, Medicare Part B beneficiaries could request COVID-19 tests from participating providers and CMS would reimburse those providers for up to eight tests per beneficiary per month at a fixed rate of $12 per test.
Rapid Health allegedly submitted claims to Medicare for OTC COVID-19 tests that it never provided to beneficiaries. Patients could order the tests through Rapid Health's website, and the pharmacy was supposed to process the order and send the test to the beneficiary. Allegedly, issues with Rapid Health's processing procedures allowed the pharmacy to bill orders to Medicare without shipping the test to the beneficiary. Although Rapid Health was aware of the issues, it allegedly continued to bill Medicare for unshipped tests.
"Providers that knowingly billed for tests that were never given to patients failed to support the goals of the project and defrauded the American taxpayers," Principal Deputy Assistant Attorney General Brian Boynton said in a statement.