VIRGINIA MEDICAL RESEARCH COMPANY AGREES TO $343,000 SETTLEMENT

Handling Whistleblower Cases Nationwide from Newport News, Virginia

Last week, Virginia-based medical research company American International Biotechnology (AIB) agreed to pay $343,000 to settle a lawsuit filed under the qui tam provisions of the False Claims Act. The suit (U.S. ex rel. Greentree Medical Center, PC v. American International Biotechnology, LLC et al., Civil Action No. 13-597 (W.D. Pa.) )alleges that AIB employees obtained improper referrals for genetic testing and billed the costs of these tests to Medicare. The lawsuit also alleges that AIB offered illegal kickbacks to doctors for obtaining the cheek swabs needed for the unnecessary genetic testing.

The complaint alleges that AIB encouraged a Pennsylvania medical clinic to administer the tests, claiming that the testing was part of a free medical research study. However, AIB later billed Medicare for the costs of the tests, violating the False Claims Act. The complaint also alleges that Jason Hoover, an AIB employee, offered illegal incentive deals to nurses. According to the complaint, Mr. Hoover asked nurses to collect cheek swabs from “any [patient] who walked through the door” and complete order forms for AIB’s genetic tests. Mr. Hoover offered the nurses $50 for each swab and corresponding genetic test order. The nurse named in the complaint, Matt Burkett, did not accept Mr. Hoover’s monetary incentives, but did begin to collect the DNA swabs.

AIB’s activities were first discovered in 2012, when patients began receiving Explanation of Benefits statements from their insurers and noticed that AIB was seeking reimbursement for the supposedly free genetic testing. Greentree Medical, parent company of the medical center named in the complaint, originally filed the qui tam suit. The United States Department of Justice later joined.

AIB’s alleged activities violate the Anti-Kickback Statute, which prohibits offering, paying, soliciting, or receiving remuneration to induce referrals of items or services covered by Medicare, Medicaid, and other federally funded programs, as well as the False Claims Act. The Justice Department says these unnecessary tests cost Medicare nearly $4,000 per patient, resulting in hundreds of thousands of wasted taxpayer dollars. In a statement released by AIB’s spokespeople, the company claims that Mr. Hoover is solely responsible for the illegal activities, but that the company agreed to settle to stop further litigation.