Laboratory Executives and Physician Pay Over $2 Million to Settle False Claims Act Kickback Allegations

A group of laboratory executives, sales professionals, marketers, and a Texas physician have agreed to pay a combined total of more than $2 million to resolve civil allegations that they participated in an illegal scheme to pay doctors for laboratory referrals. The settlements, announced by the Department of Justice, center on allegations that the defendants disguised kickbacks as managed service organization distributions to induce physicians to order lab tests, many of which were medically unnecessary. The federal Anti-Kickback Statute strictly prohibits offering or receiving anything of value in exchange for referrals of services covered by Medicare, Medicaid, or other government-funded health programs.

Former Boston Heart Diagnostics CEO Susan Hertzberg and former sales executive Matthew Theiler each agreed to pay $600,000 to resolve claims that they caused false claims to be submitted to Medicare, Medicaid, and TRICARE between 2015 and 2017. A Texas physician, Dr. Frederick Brown, agreed to pay approximately $309,000 for allegedly receiving thousands of dollars in kickback payments from purported MSOs in return for ordering lab tests. Six additional marketers paid a total of $550,000. The settlements underscore the government’s aggressive use of the False Claims Act to recover taxpayer dollars lost to kickback arrangements that can corrupt medical judgment. Since 2019, the Department of Justice has secured more than $61 million in similar settlements involving MSO-distributed kickbacks.