A diagnostic lab is in financial ruin after an insurer accused the lab of paying illegal kickbacks in exchange for referrals. The accusations are part of a lawsuit that has led the lab to file for protection in bankruptcy court.
What were the accusations against the lab?
The insurer has stated the lab paid health care providers and addiction treatment facilities to use their lab for complex lab testing, including urine sample testing. The lawsuit against the lab states a number of the tests were unnecessary and completed within the lab when the hospital could have completed the test itself.
What types of penalties can come with these allegations?
The lab is building a defense to a serious set of allegations. Overall, the insurance provider states the lab was involved in a scheme along with five other labs to provide false claims for payment. The insurance provider states the alleged scheme resulted in over $56 million in fraudulent payments. The insurance company has accused this specific lab of receiving over $700,000 in fraudulent payments for its alleged role in the scheme.
In this case, the insurance company is seeking financial remuneration. The allegations have also led to the closure of the lab.
Why file for bankruptcy?
According to the bankruptcy petition, the lab has filed for relief through Chapter 7 bankruptcy. This form of bankruptcy can result in the discharge of certain debts. In this case, the lab states it has approximately $50,000 in assets and $1 million to $10 million in debts.
If successful, the lab will likely forfeit the majority of these assets but may not be held liable for the remaining debts.