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Diagnostic Laboratory Settles Federal Claims Related to Kickbacks and Unnecessary Testing
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Key Facts at a Glance
Patients Choice Laboratories (PCL) – Medicare Kickback & Unnecessary Testing Case
- Who: Patients Choice Laboratories, diagnostic lab headquartered in Indianapolis, Indiana
- Where: Claims centered on long-term care facilities across the United States
- What: Alleged submission of Medicare claims for medically unnecessary respiratory pathogen panels (RPPs) and kickback-tainted referrals
- Statutes at issue: False Claims Act and Anti-Kickback Statute (AKS)
- Settlement amount: $9,620,000 (federal settlement; no admission of liability)
- Timeframe of alleged conduct:
- Marketing agreement: beginning Nov. 20, 2020
- Payments and RPP billing: Dec. 1, 2020 – May 11, 2022
- Independent 1099 reps: Jan. 1 – Mar. 31, 2021
- Key dollar amounts:
- ~$1.86 million in alleged marketing / referral payments
- $6 million in Medicare reimbursement for thousands of RPP claims from 43 long-term care facilities
- ≥$372,000 in commission payments to independent sales reps
- Compliance overlay: PCL is now under a 5-year Corporate Integrity Agreement with HHS-OIG, effective Sept. 30, 2025.
Federal authorities have announced a settlement resolving allegations that Patients Choice Laboratories (PCL), an Indianapolis diagnostic testing company, engaged in improper billing and kickbacks. (1) On November 13, 2025, prosecutors stated that PCL agreed to pay $9.6 million to settle claims that it violated the False Claims Act and the Anti-Kickback Statute (AKS) by allegedly submitting Medicare claims for unnecessary respiratory pathogen panels and by using financial incentives to drive referrals. For every $1 in alleged marketing/kickback payments to the “infection-prevention” company, PCL allegedly received more than $3 in Medicare reimbursement.
The government’s allegations focus on conduct that started in November 2020 when PCL signed a Marketing Services Agreement with a business that presented itself as an infection prevention provider for long term care facilities. Under the agreement, Patients Choice Laboratories paid $5,000 each month for supposed marketing and management support. (2)
Investigators asserted that the payments, which eventually totaled almost $1.9 million, were tied to referrals from the facilities the company serviced rather than genuine marketing work. (2)
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Federal officials also allege that the partner company conducted swabbing inside long term care facilities for COVID-19 testing. Those same specimens were then used by PCL to run respiratory pathogen panels that were not medically necessary. (1) In some cases, prosecutors allege that the laboratory billed Medicare for RPPs even though no COVID-19 test was performed at all.
Between December 1, 2020, and May 11, 2022, the laboratory allegedly submitted thousands of RPP claims from 43 facilities nationwide and received more than $6 million in Medicare reimbursement. (1)
A second set of allegations involves PCL contracts with independent sales agents used to promote laboratory tests from January 1 through March 31, 2021. PCL allegedly paid these representatives commissions based on the revenue generated from the testing they helped arrange; totaling commission payments of over $372,000. (1)
Federal prosecutors emphasized that these types of financial arrangements can influence clinical decisions, burden Medicare with improper costs, and reduce confidence in public health programs. (1)
Paying third parties for referrals or using contractor-based commission plans can quickly cross legal boundaries. When these financial structures influence testing patterns, the risk of unnecessary services increases, particularly in vulnerable settings like long term care facilities. The alleged reuse of COVID-19 swabs for unrelated respiratory panels underscores how quickly improper incentives can distort clinical processes.
Enforcement authorities such as the DOJ have continuously encouraged workers and industry insiders to report concerns involving kickbacks, unnecessary testing, or other misconduct affecting federal health programs.
For providers, laboratories, and compliance professionals, this settlement serves as a reminder to examine financial relationships closely, marketing practices, and contractor arrangements. Independent sales forces and facility-based partners often present heightened compliance risks. Federal authorities have made it clear they intend to continue pursuing violations involving improper compensation and unnecessary billing. With the conclusion of the recent federal shutdown, all enforcement agencies will continue investigative activity to hold these entities accountable.
Brown, LLC represents whistleblowers, health care workers, and others with insider knowledge of fraud affecting government programs.
If you are aware of kickbacks, billing schemes, or other misconduct within the health care industry, you may be eligible to file a whistleblower claim and may be entitled to whistleblower protections along with up to 30% of the recovery as a whistleblower award.
Kickback arrangements like the one alleged here are part of broader patterns regulators continue to target. Read more here.
GRC Report – Diagnostic Lab to Pay More Than $9 Million After Alleged Medicare Kickback Scheme
