Lexington Health Lab Fined Half a Million Dollars for Bribing Doctors, Feds Say

A Lexington health laboratory was fined half a million dollars for bribing doctors who referred patients to the lab.

Strata Pathology Laboratory, now known as StrataDx, agreed to pay $558,793 as part of a settlement.

“Billing arrangements like Strata’s, which provide a financial incentive to physicians to refer Medicare and Medicaid patients to a particular lab are unlawful,” said United States Attorney Carmen Ortiz said in a statement. “When a company prioritizes profit, it disregards laws that are intended to protect patient health and the integrity of the healthcare system. Settlements like this serve to deter illicit kickback schemes.”

Ortiz said the investigation started when a former Strata employee filed a complaint about its business practices.

Ortiz described the scheme:

Strata acknowledged paying consulting fees to two referring physician practices that did not provide consulting services in exchange. Strata also acknowledged entering into “account billing” arrangements with seven referring physician practices that facilitated fee-splitting between the parties. The government alleges that, under these arrangements, Strata allowed the physician practices to bill patients’ private insurers directly for pathology services that Strata performed. Strata then charged the physician practices for its services at deeply discounted rates, allowing the physician practices to pocket the difference between Strata’s discounted price and the amount of the private insurers’ full reimbursement.

All of the physician practices allegedly referred specimens of federal health care program beneficiaries to Strata, and Strata billed those programs at its full price. The United States alleges that Strata’s claims to Medicare and Medicaid were false because they resulted from kickbacks that Strata provided the referring physicians in violation of the federal Anti-Kickback Statute. The Anti-Kickback Statute prohibits offering, paying, soliciting, or receiving remuneration to induce referrals of items or services covered by Medicare, Medicaid, and other federally funded programs. Although Strata’s account billing arrangements did not explicitly condition the discounted prices upon the physicians’ referrals of Medicare and Medicaid business to Strata, the United States alleges that Strata offered the discounts with the understanding that physicians who entered into account billing arrangements with Strata would refer virtually all of their patients, including Medicare and Medicaid patients, to Strata.