Diagnostic Laboratories and Radiology Pays $17.5 Million to Settle Diagnostic False Claims

Southern California’s largest clinical lab and radiology company for nursing homes paid $17.5 million to resolve allegations that it unlawfully paid kickbacks for referrals of mobile lab and radiology services. “When medical facility owners illegally offer discounts to customers to generate business, it results in inflated claims to government health care programs and increases costs for all taxpayers,” said Glenn R. Ferry, Special Agent in Charge for the Los Angeles Region of the department of Health and Human Services’ Office of Inspector General. “This $17.5 million settlement demonstrates OIG’s ongoing commitment to safeguarding federal health care programs and taxpayer dollars against all types of fraudulent activities.”

According to the False Claims Act complaint, two former Diagnostic Lab employees, Jon Pasqua and Jeff Houser alleged that Diagnostic Labs charged Skilled Nursing Facilities (SNFs) in California reduced amounts for inpatient services paid by Medicare Part A in exchange for the SNFs referral of outpatient business to Diagnostic Labs. This allowed Diagnostic Labs to have a stream of outpatient referrals that were directly billed to Medicare Part B and Medi-Cal.

Providing illegal inducements results in increased costs and unnecessary services overburdened healthcare system nationwide. Courageous whistleblowers are needed to stem the tide of this continuing problem.