Wilkesboro Clinical Laboratory: The Owner’s Plea and a Separate Stark Settlement
In the Wilkesboro Clinical Laboratory fraud case, the former owner agreed to pay $300,000 in a civil Stark settlement over an alleged prohibited physician financial relationship, separate from his guilty plea over Medicare bills for tests never performed. The criminal court documents, as described by the Justice Department, detailed bills for identifying bacteria and testing antibiotic susceptibility even when the initial test found no pathogen. The civil case concerned a physician alleged to have sent specimens to the laboratory while earning money through the company that handled its Medicare claims.
The U.S. Attorney’s Office for the Western District of North Carolina announced both matters on April 25, 2013. Together, they show why a laboratory fraud case can turn on what happened at the testing bench and who benefited from the billing. Someone who knows the send-out work, the claims or the physician payments may see a different part of the same business.
Medicare Bills for Microbiology Tests Never Performed
The former owner’s guilty plea concerned Medicare claims for microbiology services that were never rendered. In its account of the criminal court documents and plea hearing, the Justice Department said he pleaded guilty to four counts of health care fraud and one count of filing a false tax return. He owned and operated the Medicare-enrolled laboratory, which provided microbiology and other laboratory services.
The court documents in the owner’s criminal case described a testing arrangement that crossed company lines. Wilkesboro Clinical Laboratory sent specimens to an outside company for microbiology work it could not perform in-house. The outside company generally tested for infection-causing bacteria. If an infection was present, it typically performed additional work to identify the pathogen and determine which antibiotic it was susceptible to.
Those stages explain the fraud. According to the Justice Department’s account of those court records, from at least 2007 to about 2009 the owner submitted false Medicare claims for microbiology services. He routinely billed for identification and susceptibility tests that had never been performed, including when the initial test showed no pathogen. Medicare was being asked to spend taxpayer money on follow-up work on bacteria the initial test had not found.
The outside laboratory’s work and Wilkesboro’s claim told different stories. For someone familiar with send-out testing, the comparison is concrete: what the performing laboratory actually did, what its results showed and what the billing laboratory charged Medicare for.
False Books Concealed the Physician Relationship
In its account of the criminal court documents and plea hearing, the Justice Department said the owner admitted filing false tax returns for 2007 through 2010 that substantially understated his gross income and the tax owed.
The department also reported that criminal court records described false books maintained to mask a prohibited business relationship with a physician. The same physician relationship formed the basis of the civil Stark settlement. The books mattered beyond the tax return: they concerned the financial connection between the laboratory and a doctor sending it work.
A Referring Physician Allegedly Earned Money on the Claims
The civil settlement under the Physician Self-Referral Act, commonly called the Stark Law, resolved allegations that the owner and Wilkesboro Clinical Laboratory knowingly maintained a prohibited physician financial relationship from January 1, 2006 through April 30, 2009.
The government alleged that the physician owned and operated a billing company that submitted all of the laboratory’s Medicare reimbursement claims. Under the alleged arrangement, Wilkesboro paid the company for each claim submitted, and the physician benefited directly as its owner. The government also alleged that the physician referred blood and tissue specimens to Wilkesboro for pathology testing.
The civil payment covered money the government said Medicare had paid wrongly, along with civil penalties.
What Evidence Is Needed to Prove Fraud?
For conduct like that described at Wilkesboro, the evidence connects the tests actually performed to the claims submitted, and the alleged physician referrals to the payments at issue. We work with insiders to make those connections, including who directed the billing and how the financial arrangement operated. A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers.
At Wilkesboro, the outside testing company’s returned work could be compared with the identification and susceptibility tests billed to Medicare.
These are different views inside a laboratory. A person who handles send-out results may recognize a billed test that never appears in the work returned. Someone responsible for billing or accounts payable may understand how a referring physician’s company gets paid. We bring those accounts together around the conduct they can explain.
You Know What the Laboratory Actually Did
If you know why the Medicare bill differs from the work performed, or how a referring physician benefits from laboratory payments, speak with our whistleblower experts. We build your case around that knowledge and bring in laboratory fraud whistleblower lawyers who understand healthcare billing and physician financial relationships. We stay beside you through the whole journey, turning what you saw inside the laboratory into your strongest whistleblower case.
