A federal judge in Pittsburgh approved a settlement Tuesday in which a Virginia-based medical research firm will pay more than $343,000 to the U.S. to settle claims that it ripped off the government by fraudulently marketing genetic tests to patients at a Greene County medical office.
The Justice Department said American International Biotechnology and one of its former contract sales agents, Jason Hoover, violated the federal False Claims Act by obtaining improper referrals for genetic tests and billing them to Medicare.
Mr. Hoover also was accused of offering kickbacks of $50 a patient to a nurse at Lions Medical Center in Rices Landing, Pa., an office run by Greentree Medical Center.
The scheme was initially raised in a federal suit brought last year by Greentree Medical and later joined by the Justice Department.
In the complaint, filed in April 2013 and later sealed, Greentree and the U.S. said Mr. Hoover orchestrated the scam beginning in 2012 and that the company refused to do anything about it despite being warned in several letters that it was perpetrating a fraud.
Mr. Hoover, as a contractor, visited Lions Medical regularly to check on cardiac equipment and in that capacity obtained patient insurance information and other data.
According to the complaint, he dealt exclusively with a registered nurse, Matt Burkett, and in the fall of 2012 held a dinner in which he pitched AIB’s genetic tests to Mr. Burkett and a group of doctors from other practices.
He said the testing, which required a simple cheek swab, would be free as part of a clinical trial.
He asked Mr. Burkett to swab patients and submit an order form for each with patient signatures so he could order the DNA tests. According to the complaint, he offered Mr. Burkett the $50 kickback per patient for his help. Mr. Burkett declined, but when he asked who should be swabbed, Mr. Hoover told him “everyone who comes through the door.”
Mr. Burkett, believing that the testing was free and part of a research project, obtained patient consent and swabbed patients.
According to the Justice Department, Mr. Hoover then filled out the blank order forms with the patients’ insurers and listing Mr. Burkett as the “referring physician.”
Insurers, including Medicare, ended up paying thousands for the tests. In many cases, the Justice Department said, Medicare paid $4,000 per patient.
The scam was uncovered when Lions Medical patients began receiving statements of benefits from their insurers indicating that AIB was seeking reimbursement for tests the patients had been told were free.
Greentree repeatedly wrote letters to the company, according to the complaint, telling officials to stop billing for the tests, but the firm did not stop.
In a statement released on its website, however, the company blamed the fraud entirely on Mr. Hoover and said it didn't know what he was doing.
"[AIB] had no knowledge of the alleged actions of the contract sales agent, and only learned of the action on receipt of the complaint; it did not approve or sanctions the actions of the sales agent," the
AIB also said it chose to settle the case rather than fight to "avoid the delay, uncertainty, inconvenience and expense" of litigation.
The company president, Robert Harris, said Tuesday that AIB has severed ties with the contract sales organization that had employed Mr. Hoover, but he refused to name the firm.
Torsten Ove: email@example.com or 412-263-1510. First Published July 22, 2014 12:00 AM