CorePath Laboratories: The Separate Payment for Physician Biopsy Referrals

In the CorePath Laboratories Oncology San Antonio settlement, CorePath agreed to pay $2,746,275 to resolve allegations of kickbacks for bone-marrow biopsy referrals. The laboratory allegedly performed the biopsy services and diagnostic testing, then paid private-practice entities belonging to the physicians who sent it the work. For someone inside the laboratory or the practice, the revealing transaction may be the payment going back to the source of the referral.

The Justice Department announced the civil settlements with the United States and the State of Texas on April 2, 2024. CorePath was a San Antonio diagnostic reference laboratory, and Oncology San Antonio was a hematology and oncology practice. Their alleged arrangement puts a concrete question behind physician referral payments: what was the practice being paid to provide?

The Alleged Payment for Each Biopsy

The United States alleged that CorePath agreed to pay $115 for each biopsy referred by Oncology San Antonio and its physicians. The alleged arrangement began in August 2016, with payments going to the private-practice entities of three Oncology San Antonio physicians.

CorePath’s role extended into the oncology offices. According to the government’s account, it provided in-office bone-marrow biopsy services at the practice’s locations and performed the subsequent diagnostic testing.

We see the problem in that reversal: the business doing the work allegedly paid the businesses sending it the work. In that alleged arrangement, the physician’s choice of laboratory became a source of income for the physician’s private practice. That is the incentive the government challenged, and it is why the recipient of the payment matters as much as the name on the laboratory report.

The broader economics help explain the appeal. The Robert Wood Johnson Foundation’s 2008 research synthesis, Physician Self-Referral and Physician-Owned Specialty Facilities, identified the ability to earn from facility fees and imaging’s technical component with little additional physician time as an incentive for self-referral. CorePath’s case supplies its own alleged mechanism, a payment attached to each referral. In both, understanding the incentive means asking what income follows the physician’s decision and whose work generates it.

What Are Kickbacks in Health Care?

Kickbacks in health care are payments or other benefits intended to induce referrals for services covered by government health programs. In CorePath’s case, the United States contended that the biopsy-referral payments violated the Anti-Kickback Statute. The announcement identifies Medicare, Medicaid and TRICARE as programs covered by that law and explains that claims resulting from violations can create liability under the False Claims Act.

The United States contended that the written agreement between CorePath and Oncology San Antonio qualified for none of the Anti-Kickback Statute’s exceptions. That puts the agreement’s promised services beside the work actually performed and the money actually transferred. The investigation brought together the U.S. Attorney’s Office for the Western District of Texas, the Health and Human Services Office of Inspector General, the Defense Criminal Investigative Service and the Texas Attorney General’s Civil Medicaid Fraud Division.

Oncology San Antonio’s Separate Settlement

Oncology San Antonio and its affiliated physicians separately agreed to pay $1.3 million, a smaller obligation than the laboratory’s. Their settlement also resolved allegations that an oncologist, through Oncology San Antonio and her own practice entity, provided medically unnecessary tests, services and treatments to patients in the San Antonio Metro Area and billed Medicare, TRICARE and Texas Medicaid for them.

The clinical allegations concern whether the care was needed, while the laboratory’s referral-payment allegations concern the financial arrangement behind the orders. Each connects to government billing through a different part of the business: the clinical basis for the service or the money paid to obtain the referral. An insider may know the ordering decisions, the payments, or both.

The oncologist and her practice entity also entered a three-year Integrity Agreement with the Health and Human Services Office of Inspector General. A physician formerly employed by that oncologist brought the qui tam claims resolved by the practice-side settlement.

A Referral Payment Can Travel Through Another Business

The government complaint in the separate True Health Diagnostics case alleged that laboratory-referral payments traveled through hospitals, recruiters and purported management services organizations. It described the purpose of those intermediary businesses plainly:

The complaint alleged that hospitals paid recruiters, who returned part of those payments to the providers ordering laboratory tests. This is the pattern behind laboratory payments routed through management businesses: the account receiving the money can sit between the laboratory business and the physician choosing where to send an order.

CorePath’s alleged payments went to physicians’ private-practice entities. The parallel is the need to follow the recipient business back to the referring physician, rather than stopping at the name on a payment. It gives an accountant’s knowledge of who receives the money a place beside the clinical employee’s knowledge of who orders the test.

What Evidence Does a Whistleblower Need?

For a biopsy-referral arrangement, useful evidence connects the agreement, the referred specimen, the laboratory’s work, the payment recipient and the government claim. We look at those connections with you because the financial arrangement can sit outside the medical chart. The patient record explains the care, while the agreement and accounting explain why money moved between businesses.

A laboratory employee may recognize the specimen’s path from an oncology office into testing. A practice accountant may recognize the payment formula and recipient entity. Someone handling claims may know which program was billed and under whose billing identity. Those views become more useful together, where the order, service and payment can be connected to the same business arrangement.

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. We work with insiders to connect what they know about referral decisions and payments to the claims the government received.

You Know Where the Biopsy Payment Went

If you saw referral-linked payments moving from a laboratory into physicians’ practice accounts, speak with our whistleblower experts about where the referral money went. We build your strongest healthcare whistleblower case with you and bring in healthcare fraud whistleblower lawyers who understand laboratory referral arrangements. From the first conversation onward, we stay beside you as partners in pursuing the government’s recovery.