Advanced Pathology Solutions: Extra Tests Before the Pathologist’s Review

The Advanced Pathology Solutions settlement announced by the Justice Department totaled $30 million to resolve allegations that APS and its owners paid kickbacks for pathology referrals and ordered unnecessary testing. The alleged arrangement gave gastroenterology practices a way to bill for preparing biopsy slides while sending the interpretation work exclusively to APS. Inside those practices, the government said, APS directed staff to order special stains automatically before a pathologist reviewed the routine slide to see whether more testing was needed.

Advanced Pathology Solutions is an anatomic pathology laboratory headquartered in North Little Rock, Arkansas. Its management services organization, APS MSO, and current and former owners joined the resolution described in the June 17, 2026 announcement. The government alleged that Medicare faced claims for extra stains ordered before anyone reviewed the routine slide. Taxpayers were being asked to pay for a protocol’s decision, before a pathologist made one.

How the In-House GI Lean Lab Worked

The government alleged that APS tied each in-house GI lean lab to an exclusive pathology referral agreement. It said APS and its owners set up and managed limited-purpose laboratories inside gastroenterology practices nationwide, furnishing benefits that induced the practices to send their patients’ pathology work to APS exclusively.

In anatomic pathology, the technical component includes specimen processing, sectioning, staining, equipment and technician work. The professional component is the pathologist’s interpretation. Those components can be billed separately. The practice could therefore earn revenue from preparing the slide while an outside laboratory supplied the interpretation.

Under the alleged APS model, the practice prepared and stained biopsy specimen slides in its lean lab, then shipped them to North Little Rock for interpretation and review. APS helped establish the operation inside the practice and secured the work that left it.

The settlement agreement’s account of the government’s claims places the lean-lab conduct from January 1, 2015, through July 31, 2022. It describes alleged benefits exchanged for patient referrals alongside claims for medically unnecessary pathology testing.

Do Doctors Get Kickbacks for Ordering Tests?

The government alleged that APS furnished kickbacks to gastroenterology practices through benefits tied to the setup and operation of their lean labs. In exchange, the practices agreed to send their patients’ slides exclusively to APS. The alleged inducement was built into the referral relationship.

A person who knows how that arrangement was sold to the practice may understand the financial bargain more clearly than someone looking only at the finished pathology report.

Special Stains Before H&E Review

The government alleged that APS directed lean-lab personnel to order special stains automatically before a pathologist reviewed the routine hematoxylin and eosin stain. H&E review was the point at which the pathologist would determine whether additional testing was necessary. According to the allegations, the extra testing had already been ordered.

In that account, the protocol came before the assessment of the patient’s need for more testing. In its description of the testing allegations, the Justice Department said the protocol produced special stains that were medically unnecessary and ineligible for Medicare reimbursement. It further alleged that APS often ordered additional confirmatory immunohistochemical testing on samples arriving from the lean labs, also without medical necessity.

Reviewing only the final interpretation would miss the earlier decision that put the special stains into motion.

Who decided the extra stain was needed, and what had that person reviewed when the decision was made? The allegation was that a recurring protocol supplied the answer ahead of the pathologist.

The Separate ENFD Referral Commission

The settlement also covered an alleged epidermal nerve fiber density referral arrangement from November 1, 2018, through November 30, 2020. APS and its chief executive allegedly paid a device-industry participant to encourage providers to order ENFD testing from APS. The alleged commission was 4% of all payments APS collected for the testing he referred.

In the government’s account in the agreement, the recipient invented the neoGEN-Series device and effectively served as co-chief executive of RST Sanexas, its manufacturer. He allegedly encouraged medical providers using that device to order APS’s ENFD testing for their patients. The government also said his contract prohibited him from promoting competing laboratories’ ENFD testing or promoting another laboratory’s ENFD services to APS customers.

Under the alleged arrangement, payment followed collections: more money collected on referred testing meant more commission. The government alleged that this arrangement violated the Anti-Kickback Statute and resulted in false claims, including claims involving Medicare, TRICARE and the Veterans Health Administration.

Audits That Reach the Referral Relationship

APS entered a five-year Corporate Integrity Agreement with the Department of Health and Human Services Office of Inspector General. The Inspector General’s listing records its effective date as June 17, 2026. The Justice Department describes requirements for a compliance program, training and education, auditing and accountability, and review of physician referral relationships.

Laboratory literature has connected those controls to everyday ordering for decades. Model Plan Helps Laboratories Fight Fraud, published in Laboratory Medicine in 1997, described recommendations for requisitions that document the medical necessity of each test. It also described monitoring the continuing validity of standing orders and reviewing test-use data. Its account traced many of the recommendations to earlier laboratory integrity agreements and government investigations.

A written protocol can be followed exactly and still be the source of the problem alleged here. The comparison has to reach the decision to order the test and the patient-specific reason for it.

How to Detect and Deter Laboratory Fraud?

The stain orders, timing of routine-slide review and referral agreements connect the testing decision to the bill. Our whistleblower experts work with laboratory insiders who can explain how a standing protocol affected what the practice and APS billed. That knowledge brings the laboratory’s operations into a case about its claims.

Atlanta Gastroenterology Associates and the Practice’s Own Claims

Atlanta Gastroenterology Associates agreed to pay $4.75 million in a separate settlement announced on February 27, 2026. The government alleged that the practice received kickbacks for gastrointestinal pathology referrals and performed services that were not medically necessary.

According to the government, the practice billed Medicare and other insurers for the technical work performed by its histology technicians, while APS billed for interpretation. The alleged benefits APS supplied in setting up and operating the laboratory secured the practice’s exclusive referrals.

The government also alleged that the practice’s automatic special-stain orders lacked justification in the medical record. The Atlanta Gastroenterology resolution addressed the referring practice’s own benefits, testing and claims. The later APS resolution addressed the laboratory and its owners.

Whistleblowers Brought the APS Cases

The APS complaint followed three qui tam lawsuits brought by whistleblowers. The United States joined and took over the cases. One lawsuit alleged medically unnecessary pathology testing. Another alleged both unnecessary testing and payments to gastroenterology practices for referrals.

The $24 million agreement signed by APS, APS MSO and its chief executive was part of the $30 million the announcement said the laboratory and its current and former owners agreed to pay. The agreement allocated $22.5 million to the lean-lab cases. It provided for a collective whistleblower reward of 18% of the lean-lab recovery.

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

You Know Who Chose the Extra Tests

If you worked with the lean-lab protocols, referral agreements or ENFD commissions, talk with our whistleblower experts about what you saw. We build your strongest laboratory fraud whistleblower case around what you know and bring in laboratory fraud whistleblower lawyers who understand pathology testing and referral payments. We stay with you as your partners through the case, connecting the business arrangement to the claims it produced.