Arkansas Pathology Lab and Owners Pay $30 Million to Settle Kickback and Unnecessary Testing Allegations

Advanced Pathology Solutions PLLC, an Arkansas-based anatomic pathology laboratory, along with its management services organization and current and former owners Kevin Hannah, Donell Burkett, and Daniel Hunter Pledger, have agreed to pay $30 million to resolve allegations that they violated the False Claims Act. The government alleged that from 2015 through July 2022, APS provided unlawful kickbacks to gastroenterology practices across the country to induce them to refer pathology testing to APS, resulting in false claims to federal healthcare programs.

The scheme centered on a business model where APS set up and managed limited-purpose laboratories within gastroenterology practices. In exchange for various benefits furnished by APS, the practices agreed to exclusively refer their patients to APS for pathologist interpretation. The government further alleged that APS directed lab personnel to automatically order certain special tests before a pathologist even reviewed the initial slide to determine whether additional testing was necessary—resulting in claims for testing that was not medically reasonable or necessary and ineligible for Medicare coverage. The settlement also resolves allegations that APS CEO Kevin Hannah knowingly paid volume-based commissions to an individual in exchange for referrals for epidermal nerve fiber density testing, a violation of the Anti-Kickback Statute.

The case originated from three qui tam whistleblower lawsuits filed under the False Claims Act. In connection with the settlement, APS entered into a five-year Corporate Integrity Agreement requiring implementation of a robust compliance program, new training requirements, and a review of physician referral relationships. This case reflects the government’s aggressive pursuit of healthcare fraud, particularly schemes where financial incentives—not patient care—drive medical decision-making.