Boston Heart Diagnostics: The Doctors Ordered Tests and Collected the Returns

In the Boston Heart Diagnostics lawsuit settlement, the laboratory agreed to pay $26.67 million over alleged health care kickbacks and improper hospital outpatient billing. The government alleged that doctors received investment returns tied to the tests they ordered, while hospitals billed for patients who were not their outpatients. For an insider in laboratory sales, hospital billing or a physician practice, the case connects the sales pitch to the claim and the money that came back.

The Department of Justice announced the corporate settlement on November 26, 2019. Boston Heart, based in Framingham, Massachusetts, faced allegations involving the Anti-Kickback Statute and the Stark Law, as well as improperly billed laboratory claims. The settlement covered several ways of buying the same thing: a physician’s next referral.

How the Hospital and Laboratory Money Moved

Boston Heart allegedly received a payment for each test it performed for small Texas hospitals, while the hospitals supplied the billing channel. From 2015 to 2017, the government alleged, Boston Heart coordinated with independent hospital marketers to generate more referrals and more testing revenue.

The government alleged that the marketers set up management service organizations, usually called MSOs, and offered physicians payments presented as investment returns. According to the government, those payments were actually based on, and offered in exchange for, the physicians’ laboratory referrals. The doctor ordering the test had a financial interest in where it went.

Boston Heart’s alleged sales role was specific. It helped identify physicians to approach, referred interested doctors to the MSOs and joined sales pitches offering money for referrals.

The resulting tests were billed to Medicare, Medicaid and TRICARE. The government also alleged that Boston Heart conspired with the hospitals and others to submit outpatient laboratory claims for people who were not hospital outpatients, obtaining higher reimbursement.

What the Corporate Settlement Covered

The corporate settlement covered alleged investment-return kickbacks, hospital outpatient billing, processing and handling fees, waived patient copayments and deductibles, and in-office dietitians provided in exchange for referrals. Cash, reduced patient bills and practice services all appeared in the government’s account of how Boston Heart attracted laboratory business.

Two whistleblower cases brought the processing-fee, patient-charge and dietitian allegations. The Justice Department announced that the whistleblowers would receive approximately $4.36 million from the settlement. A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers.

Do Doctors Get Kickbacks for Ordering Tests?

The government alleged that Boston Heart helped offer doctors money for laboratory referrals, including through purported investment returns. A separate payment route described in a whistleblower’s complaint used packaging and handling fees paid through third parties.

The complaint alleged that Boston Heart contracted with LLmobileLab, Biotex and VeniExpress to pay a $15 packaging and handling fee. The intermediary kept part and passed part to someone in the physician’s office, even when that person had not drawn the blood or was not a trained phlebotomist.

The filing quoted a Boston Heart representative explaining why an intermediary stood between the laboratory and the doctor:

In the representative’s quoted account, the intermediary changed the appearance of the payment while the money still reached the referring office.

The complaint also described splitting a patient’s specimens among laboratories to generate multiple packaging payments and multiple insurance charges. It called that practice “stacking.”

The pattern also appeared in the government’s Health Diagnostic Laboratory and Singulex allegations. Those laboratories allegedly induced blood-test referrals through processing and handling payments and routine patient-charge waivers.

Patient Discounts That Brought Medicare Business

The whistleblower alleged that Boston Heart used waived private-insurance copayments and deductibles to attract Medicare referrals. The complaint called the resulting Medicare business “pull-through”: the laboratory allegedly accepted losses on private-patient charges because the federally reimbursed testing made the arrangement worthwhile.

The complaint further alleged that Boston Heart later substituted nominal patient fees, marketed as its “Know It Now Price,” for the ordinary calculation of a copayment or deductible. Sales representatives allegedly told physicians these were not copayments and that the prices were below the laboratory’s costs.

One Checkbox, a Panel and a Lifestyle Program

The whistleblower described Boston Heart’s Complete One panel this way:

Requisition design had been a laboratory-industry issue long before this case. The 1997 Laboratory Medicine article Model Plan Helps Laboratories Fight Fraud described recommendations from the Department of Health and Human Services’ Office of Inspector General for forms with room to document the medical necessity of each test, and notices explaining a profile’s individual components and how the laboratory would bill them.

A separate whistleblower complaint described another way of generating repeat testing. Boston Heart’s Lifestyle Program allegedly required seven laboratory tests before a patient could receive a Personalized Nutrition and Life Plan and free or discounted dietitian coaching. Two were available exclusively from Boston Heart, and patients would need retesting to assess the program’s effectiveness.

The complaint alleged that the laboratory placed its own dietitians in physician offices. It also described constant pressure on sales representatives to sell the Life Plan because it led to repeat tests and increased commissions, with monthly rankings identifying the top sellers.

The program offered something a patient could use: nutrition advice and coaching. The alleged business incentive sat in the required testing before enrollment and the retesting afterward.

What the Criminal Case Added

In the related criminal case, a jury found five defendants, including laboratory and hospital executives, guilty of conspiring to violate the Anti-Kickback Statute. The Justice Department’s November 30, 2023 account of the verdict describes the hospital and laboratory economics behind the scheme.

Little River Healthcare in Rockdale and Stamford Memorial Hospital in Stamford partnered with Boston Heart, which specialized in advanced cardiovascular lipid testing. According to that criminal-case account, Boston Heart processed the blood tests for a fee while the hospitals billed insurers at a much higher hospital outpatient rate than the laboratory could receive itself.

The hospitals paid part of their laboratory revenue to marketers. Those marketers operated MSOs and passed part of the money to referring physicians. The same account says Boston Heart executives and sales personnel used the MSO kickbacks to increase referrals, revenue, bonuses and commissions.

The hospital’s reimbursement advantage supplied money for the referral arrangement. The sales force had its own incentive to keep that business growing. Following only the laboratory’s per-test fee would miss the money moving through the hospital and back to the ordering doctor.

Later Settlements Reached Staffing and Former Executives

Free Staff Working for Physician Practices

Boston Heart agreed to a separate payment of about $641,000 after disclosing conduct to the Inspector General. In its June 12, 2023 enforcement notice, the Inspector General alleged that the laboratory provided three physician practices with phlebotomists who performed work outside their phlebotomy duties.

The alleged benefit was staff time spent working for the practice.

Told to Stand Down, They Allegedly Expanded

On June 1, 2026, the Justice Department announced that Boston Heart’s former CEO and former vice president of sales agreed to pay $1.2 million in civil settlements. The government alleged that they caused false claims to Medicare, Medicaid and TRICARE through the Texas hospital referral arrangement.

The executives allegedly knew that marketers using MSOs were recruiting doctors and received a strong recommendation to “stand down on all hospitals,” particularly in Texas. The former CEO nevertheless allegedly approved expansion to another hospital, and the former sales executive allegedly implemented it, continuing with many of the same marketers.

The same announcement reported an additional $859,055 in civil settlements with a physician and marketers. Its physician allegations concerned referrals to Little River Healthcare, which the release identified as a critical access hospital, and True Health Diagnostics. Its marketer allegations concerned payments disguised as MSO distributions to induce laboratory referrals.

What Evidence Is Needed to Prove Fraud?

For an arrangement like Boston Heart’s, the important evidence connects the hospital’s claim and the doctor’s payment to the laboratory business that generated both. A hospital billing employee may know how the patient became an outpatient on the claim. An MSO distribution calculation may show how a doctor’s referrals affected the money paid back.

The Boston Heart complaint also alleged an internal warning to the board about physician shareholders’ undisclosed ownership, unusually high draw fees, specimen splitting and patient-charge waivers. Those allegations make management communications part of the story alongside the billing and payment records.

Our whistleblower experts work with insiders to turn that knowledge into a healthcare fraud case. We help you make sense of the billing arrangements, referral payments and management decisions behind what you saw.

You Saw How the Referrals Became Revenue

If you know how a laboratory used hospital billing, investment distributions or practice services to win referrals, talk with our whistleblower experts. We build the case with you and bring in laboratory fraud whistleblower lawyers who understand referral payments and hospital claims. We stay beside you through the process, building your strongest laboratory whistleblower case.