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Massachusetts Toxicology Lab Hit With $1.3M Judgment in False Claims Act Settlement

NEW YORK (360Dx) – A $1.3 million civil judgement was ordered against Calloway Laboratories in a settlement to resolve False Claims Act allegations, the US Attorney's Office for the Eastern District of Kentucky announced this week.

The judgment is part of a settlement resolving False Claims Act charges for false claims for urine drug testing submitted to Medicare and Tricare between May 2014 and November 2014. The judgment against the Massachusetts-based toxicology lab was ordered by the US District Court for Eastern Kentucky, because whistleblower Michael Rader, a former employee of the company, worked in that region.

As part of the settlement agreement, Calloway Laboratories acknowledged that it provided free testing supplies to physicians for the purpose of inducing or rewarding referrals of urine drug testing to the lab. The provision of free testing supplies to induce referrals also violates the Anti-Kickback Statute and the Stark Law, which prohibits labs from billing Medicare for services from physicians with which a lab has an improper relationship.

"Offering financial incentives to physicians in exchange for patient referrals undermines the integrity of our health system," US Attorney Robert Duncan, Jr. said in a statement.

The US Attorney's Office for the Eastern District of Kentucky received assistance with the case from the US Department of Health and Human Services, Office of the Inspector General's Office of Investigations, and the US Department of Defense, Office of Inspector General's Defense Criminal Investigative Service.