Bostwick Laboratories: A Clinical Study That Brought in Biopsy Business

In the Bostwick Laboratories settlement, the company agreed to pay more than $6.5 million over allegations of unnecessary cancer testing and physician referral incentives. Its former owner later reached a separate settlement in the same whistleblower case. An earlier settlement concerned a different way of bringing in testing business: a clinical study that allegedly paid physicians to send the sponsoring laboratory both a urine sample for research and the patient’s prostate biopsy. The biopsy business came with the study.

Bostwick was a pathology laboratory headquartered in Glen Allen, Virginia. Who chose the test, who chose the laboratory, and what the physician received for sending business there are the questions behind these cases.

Cancer Tests Without the Treating Physician’s Order

The Justice Department alleged that Bostwick’s former owner directed the laboratory to bill Medicare and Medicaid for medically unnecessary cancer-detection tests performed without the treating physicians’ consent or order. The allegations covered conduct from 2006 to 2011.

The tests included FISH testing, which the Justice Department described as a way to detect bladder cancer. During the period covered by the settlement, Medicare reimbursed FISH testing at $456 to $966 per test. The laboratory could send Medicare a bill for a cancer test that, according to the government, the patient’s own doctor never asked for.

The former owner had been Bostwick’s founder and chief executive officer. The case also covered other unnecessary tests and financial incentives offered to referring physicians.

For a laboratory insider, the central question is concrete: where did the instruction to run the cancer test come from? A test can reach the billing system after a decision inside the laboratory that the referring physician never made.

The Company and Former Owner Settled Separately

Bostwick Laboratories agreed to its corporate payment on August 28, 2014. The former owner’s resolution, announced on January 8, 2016, called for a potential payment of up to $3.75 million in the same case.

The owner’s announced payment terms were more than $2.6 million, with an additional $1.125 million if specified financial contingencies occurred within five years.

An industry whistleblower brought the qui tam case under the False Claims Act. The government pursued the claims against both the laboratory and the former owner.

The earlier clinical-study settlement belonged to a different whistleblower case. That case began with a urologist whom Bostwick approached about participating in its study.

The Clinical Study Required the Biopsy Business Too

Bostwick agreed to pay $503,668 in the clinical-study settlement announced on August 20, 2013. The government alleged that the company paid physicians to enroll patients in a study and, through the study’s requirements, steered their prostate-biopsy analysis business to Bostwick.

The study was called Determination of the Accuracy of PCA3Plus Urine Assay for the Detection of Prostate Cancer. According to the government’s allegations, participating physicians had to send Bostwick both the urine assay material and prostate-biopsy samples for each enrolled patient. Those biopsy samples could otherwise have gone to other laboratories.

The government’s announcement put that connection plainly:

The billing followed the specimens. According to the government’s allegations, Bostwick billed the federal health care programs Medicare and TRICARE for both the prostate-biopsy analysis and the PCA3Plus urine assay for each enrolled patient. The government described the biopsy as the established standard for prostate-cancer detection and alleged that the additional urine assay was not medically necessary in those circumstances.

Study enrollment allegedly brought the laboratory the biopsy business and a claim for the urine assay alongside it.

The whistleblower saw the arrangement from the receiving end of the sales approach. A urologist approached to participate brought a False Claims Act complaint in the Eastern District of New York, prompting the investigation that led to the settlement. The physician’s vantage point was the proposed arrangement itself: what participation required and where the specimens would go.

The Order Form Connects the Sales Pitch to the Test

The form accompanying the specimen is where the physician’s intention has to reach the laboratory.

The Laboratory Medicine article Model Plan Helps Laboratories Fight Fraud, published in 1997, described federal recommendations for uniform requisition forms with space to document the medical necessity of each ordered test. It also described notices explaining the individual tests within laboratory profiles and how the laboratory would bill for them.

The same article described monitoring standing orders and examining test-use data. Applied to an allegation like Bostwick’s, those records connect an individual order to a repeated testing pattern. Someone who knows how the laboratory turns a request into performed tests may be able to explain a pattern that a payment total alone cannot.

Do Doctors Get Kickbacks for Ordering Tests?

Doctors can receive kickbacks for ordering tests through discounts, billing arrangements or study payments, as the government alleged in the Bostwick cases. In the cancer-testing case, it alleged that Bostwick offered discounts and billing arrangements to induce referrals. In the study case, it described payments tied to participation that required physicians to send biopsy samples to the sponsor.

The allegation is about what the arrangement buys. A discount can influence the selection of a laboratory just as a direct payment can. The government’s account of the owner settlement identified the Anti-Kickback Statute as the law behind its referral-incentive allegations and explained the concern: financial benefits can interfere with a physician’s judgment about the patient’s interests.

Another pathology case shows how far that benefit can sit from the test itself. In the Miraca Life Sciences settlement, the government alleged that the company, later known as Inform Diagnostics, gave referring physicians electronic-health-record subsidies and free or discounted technology consulting services.

Bostwick’s alleged study payments and Miraca’s alleged technology benefits used different offers to reach the same business decision: where the physician sent laboratory work. A person responsible for accounts, sales arrangements or physician relationships may see that connection before it is visible in a claim.

The cost falls on more than the payer. On the government’s account of the Bostwick study, competing laboratories lost the opportunity to receive biopsy specimens that physicians could otherwise have sent elsewhere. Medicare and TRICARE then faced claims for an additional assay the government alleged was unnecessary.

What Evidence Is Needed to Prove Fraud?

For the arrangements alleged in the Bostwick cases, the relevant records are the order or requisition showing who requested the FISH test, the study enrollment terms tying participation to biopsy routing, and the discount and billing terms offered to referring practices. Your knowledge of how a test entered the workflow or how a study was pitched helps us understand what happened behind the bill.

What Is the Reward for Medicare Fraud Whistleblower?

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers.

For the Bostwick company and former-owner settlements, the Justice Department announced that the industry whistleblower would receive more than $2.5 million from the government’s settlements with both. That award belonged to the cancer-testing and referral-incentive case.

The study case came from a physician who had been approached to participate. Together, the cases show the value of different views of the business: knowledge from within the industry and knowledge of the proposal presented to a referring doctor.

You Know How the Test Became Business

If you saw cancer tests added without physician orders or study payments tied to specimen referrals, talk with our whistleblower experts about what happened inside the arrangement. We develop the case with you, bring in laboratory fraud whistleblower lawyers who understand testing and referral incentives, and stay beside you through the pursuit of a recovery.