SC Doctors Expose Health Care Scheme


HDL WhistleblowerA Hilton Head doctor was one of three whistleblowers who exposed health care fraud being committed by Health Diagnostic Laboratories (HDL) of Richmond, VA, and Singulex Inc., of Alameda, CA. Three cases were filed in South Carolina against the companies under the False Claims Act, which allows people with evidence of fraud to sue corporations on behalf of the U.S. government.

Because it can be risky to uncover fraud and expose the people or businesses behind it, provisions in the False Claims Act state that the person bringing the case — the whistleblower — may be awarded up to 30% of the funds recovered.

HDL and Singulex were accused of paying doctors $10 to $17 for referring their patients for blood tests, even if they weren’t medically necessary. The two companies were billing federal programs, including Medicare, for the tests and then sharing the profits with physicians in a kickback scheme that labeled the money as processing and handling fees.

That brought another law into play: the Anti-Kickback Statute, which prohibits paying money in order to get referrals for services covered by federally funded programs. The statute is intended to ensure that a doctor’s judgment isn’t clouded by under-the-table financial incentives.

Multimillion-Dollar Settlement Reached

The U.S. Justice Department announced in April 2015 that HDL and Singulex agreed to multimillion-dollar settlements with the government, with HDL paying $47 million and Singulex paying $1.5 million. Federal attorneys said the large settlement was proof of their determination to work with whistleblowers who come forward to defend the integrity of the health care system.

The case was also cited as a victory for the Health Care Fraud Prevention and Enforcement Action Team (HEAT), which was put into action in 2009 by the U.S. Attorney General and the Secretary of Health and Human Services. The partnership between the two offices was formed to target Medicare and Medicaid fraud, and since its establishment, HEAT has recovered more than $23.9 billion through False Claims Act cases.

Get an Attorney on Your Side

The three whistleblower cases in South Carolina prompted a federal investigation, and HDL CEO Tonya Mallory was sued by the U.S. federal government, along with four other defendants named in the case. This action followed the earlier settlement from HDL and Singulex and could mean Mallory will be responsible for paying millions in civil penalties.

The Department of Justice got involved in the process early, stepping into the South Carolina whistleblower suits and then continuing its investigation and working to hold the company heads personally responsible for the systematic fraud perpetrated through the kickback scheme with physicians.

Those who suspect a fraud is being perpetrated against the U.S. government, and against taxpayers, are well advised to seek the advice of a law firm experienced in preparing whistleblower complaints. Government lawyers often struggle under large case loads, and when the relator’s (whistleblower’s) disclosures are well drafted by a private law firm, the government is more likely to intervene in the case and bring their resources to bear against the defendants.


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