Clinical lab to pay $2.5M for rent sham kickback scheme

Gavel Money Social

Balance Diagnostics USA settled its civil fraud lawsuit with the U.S. Southern District of New York at a cost of $2.5 million, announced the U.S. Attorney's office in a statement.

The Cedarhurst, NY-based clinical laboratory admitted that it anticipated volume or value of patient referrals when it determined rents the lab would pay to physicians and their practices for lab services. According to the U.S. Attorney's office, the actions were considered kickbacks in the form of sham “rent payments” to secure patient referrals that were in violation of the federal Anti-Kickback Statute (AKS).

From January 2009 through December 2019, Balance Diagnostics paid providers hundreds of thousands of dollars, rents well above fair market rental value. The lab's agreements with the providers typically provided for the use of an exam room by lab personnel, as well as for the use of basic equipment (e.g., a telephone, fax machine, a computer) and administrative staff to assist with patient flow and recordkeeping, according to the U.S. Attorney's office.

Under the settlement, Balance will pay the U.S. $1,725,850 and has also agreed to pay the state of New York $774,150 to resolve state law claims, for a total combined recovery of $2.5 million. According to the U.S. Attorney's office, Balance also has executed judgments in favor of the U.S. for $4,280,108, and in favor of the state of New York for $1,919,892, for a total combined amount of $6.2 million, which may be enforced if Balance fails to make the payments required under the settlements.

In connection with the filing of the lawsuit and the settlement, the U.S. Government joined a private whistleblower lawsuit that had been filed under seal pursuant to the False Claims Act.

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