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Laboratory CEO to Pay $4.25M in DOJ Kickback Settlement
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The Department of Justice has announced a series of settlements totaling more than $6 million to resolve allegations of illegal laboratory kickbacks disguised as management service organization (“MSO”) payments. At the center of the enforcement action is a former laboratory CEO, who agreed to a $4.25 million False Claims Act settlement.
The Violation: Anti-Kickback Statute (AKS)
The Anti-Kickback Statute (AKS) makes it unlawful to knowingly offer, pay, solicit, or receive any form of remuneration in exchange for referrals of services covered by federal healthcare programs like Medicare and Medicaid. Importantly, any claim submitted to a federal program that resulted from a kickback is automatically considered false under the False Claims Act.
In this case, DOJ alleged that the MSO payments and other financial arrangements were not legitimate business transactions, but rather disguised kickbacks to secure physician referrals. By masking kickbacks as routine payments, the participants tried to evade detection while profiting from increased lab testing volume.
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CEO Settlement – Verified Terms
According to the fully executed September 2025 settlement agreement between the United States and the former executive:
- The former CEO will pay $4.25 million plus 4.25% annual interest, with $2.125 million designated as restitution.
- Payments are scheduled through May 2026, beginning with a $100,000 installment in September 2025.
- To secure payment, the executive pledged collateral including a brokerage account, ownership in several LLCs, and a Puerto Rico property valued at $4.5 million.
- The settlement resolves allegations that the executive caused false claims to Medicare, Medicaid, and TRICARE by facilitating kickbacks disguised as MSO distributions, consulting fees, and copay waivers.
- In a related criminal case, the executive pleaded guilty to Conspiracy to Commit Illegal Remunerations and consented to forfeit $1.8 million.
The matter originated under the False Claims Act’s qui tam provisions through a whistleblower, who will receive a share of the settlement as a False Claims Act whistleblower reward up to 30% of what the government recovered.
Physicians and Marketers Also Settled False Claims Act Allegations
- The physicians allegedly received MSO payments tied to laboratory referrals.
- The marketers allegedly used MSO entities to funnel improper payments to physicians in exchange for those referrals.
Some of these individuals were also defendants in related criminal prosecutions in the Eastern District of Texas.
Why This Matters
The Anti-Kickback Statute prohibits offering or receiving payments to induce referrals for services covered by Medicare, Medicaid, or TRICARE. Federal authorities stress that such schemes undermine clinical decision-making and waste taxpayer dollars.
This case highlights three key points:
- Legal Exposure: This settlement illustrates how even indirect or disguised financial arrangements (like MSOs or consulting fees) can violate the AKS.
- Broad Liability: DOJ held not only the lab CEO accountable, but also physicians and marketers who took part in the scheme.
- Patient care must come first. Federal healthcare programs exist to serve patients, not enrich executives or marketers.