Health Diagnostic Laboratory: Processing Fees, Copay Waivers and the Later Verdict

In the Health Diagnostic Laboratory fraud settlement, the cardiovascular testing company agreed to pay $47 million over allegations that it bought physician referrals and billed federal health care programs for medically unnecessary tests. The alleged arrangement reached from the sales pitch to the order form: pay the practice for sending blood, promise patients no out-of-pocket bill, and put tests into panels that kept them coming through the laboratory. For someone who handled the requisitions, referral payments or billing, the complaints describe decisions made inside the business.

The Department of Justice announced the settlement on April 9, 2015. Health Diagnostic Laboratory operated in Richmond, Virginia. Singulex, a separate laboratory in Alameda, California, agreed to pay $1.5 million in the same announcement. The announcement’s $48.5 million covered both laboratories. BlueWave Healthcare Consultants marketed their testing and allegedly helped offer the inducements that brought physicians’ referrals to them.

How Health Diagnostic Laboratory’s Referral Economics Worked

The government alleged that Health Diagnostic Laboratory paid physicians processing and handling fees of $10 to $17 per referral to induce blood-test orders. The payment went to the practice that controlled where the specimen would go. The laboratory then performed the tests and billed the health care program.

The treating clinician orders the test and keeps the medical record explaining why the patient needs it. The laboratory performs the test, submits the claim and retains the ordering information it receives. Medicare’s ordering and documentation rules put different parts of the same transaction in different hands. A paid claim alone cannot show what a salesperson promised the referring practice.

The whistleblowers described the promises in detail. In the third amended complaint involving HDL, BlueWave and Singulex, a physician allegedly switched from Berkeley HeartLab after BlueWave offered $20 per patient referral in return for a one-year agreement to send all non-basic laboratory tests through BlueWave. The offer bought an ongoing referral relationship.

The same complaint describes a BlueWave representative offering $30 total for each HDL and Singulex laboratory panel ordered through the company. According to the whistleblower, the representative also said physicians could order follow-up panels every three months and Medicare would reimburse them. Patients, the representative allegedly promised, would owe nothing because the laboratories would accept whatever insurance paid.

The other whistleblower complaint compared the payments with a $3 Medicare blood-draw allowance and alleged that the packaging fees far exceeded the work involved. It gave an example in which a physician could draw four vials, order four tests, send four packages and receive an $80 packaging fee. The whistleblower alleged that the specimens could come from the same blood draw and be processed together, while the fees increased with the packages.

That complaint also alleged a speakers bureau that paid referring physicians thousands of dollars for speaking at conferences once or twice a year, if at all. It linked those payments to referral of the physicians’ lipid-testing business, including Medicare business. A marketing employee responsible for speaker payments could see another part of the same referral relationship.

For an insider, the useful question is how the payment terms compared with the work. Here the complaint alleged that drawing and packaging several specimens involved little additional effort, while physicians could receive speaker payments with little or no speaking. The services named on the payment and the services actually provided were central to its account.

The description on an invoice might say specimen handling. The allegations concerned what the payment bought: more referrals and more tests, with the government paying the laboratory’s bill. Under that alleged arrangement, patients got tests they did not need, taxpayers paid for them, and laboratories that would not buy referrals lost business.

What the Health Diagnostic Laboratory Panels Allegedly Added

The Health Diagnostic Laboratory complaints alleged that the laboratory’s panels built unnecessary tests into the order before a specimen reached the bench. The problem they described was visible on the requisition itself.

One complaint alleged that both Health Diagnostic Laboratory panels included Apo B and LDL-P tests, which the whistleblower said supplied the same medical information without changing treatment. The allegation was especially specific about the doctor’s ability to choose:

The complaint alleged that Health Diagnostic Laboratory then performed both tests and billed Medicare for each. A physician could choose the panel but, according to that account, could not remove either of those components. The order form made the extra test repeatable.

The third amended complaint described a different default for the CYP2C19 Plavix test. It alleged that Health Diagnostic Laboratory ran that test for every patient on BlueWave’s baseline panel unless the physician specifically removed it, even though the complaint described its usefulness as limited to patients taking Plavix or being considered for it.

That filing also reached diabetes-related testing. Among the HDL tests included in the baseline and follow-up panels, it identified HbA1c testing for average blood glucose and said that information was typically useful for patients with high blood glucose or diabetes. The allegation was that the panel promoted testing across patients without the individual need to support it.

BlueWave’s panels also included Singulex tests. The complaint placed cTnI in that group and alleged that it appeared on every baseline and follow-up panel unless actively removed, although such testing was typically ordered for suspected active cardiac injury. BlueWave’s sales package joined tests from separate businesses.

Some tests allegedly could not be removed. Others stayed unless someone removed them. In both accounts, the question was who made the decision for the particular patient before the claim went out.

The Order Form Was Already a Known Pressure Point

Laboratory guidance had addressed the connection between profiles and individual medical need well before HDL’s settlement. The June 1997 Laboratory Medicine article Model Plan Helps Laboratories Fight Fraud described the inspector general’s recommendations for requisitions with space to document each test’s medical necessity, physician notices explaining profile components, and monitoring of continuing standing orders.

That article explains why the form deserves attention alongside the fee ledger. A profile groups tests together, but the patient’s reason for each test still matters. The Health Diagnostic Laboratory complaints alleged that the laboratory’s chosen package could displace that decision. Someone who knew which version of a panel was in use, and which components the practice could remove, could explain something the final bill would not.

How Copay Waivers Pulled in Medicare Referrals

Health Diagnostic Laboratory’s whistleblower complaint alleged that promises to waive costs for privately insured patients helped attract the physician’s Medicare referrals too. Doctors could attract and retain patients by promising that the laboratory would not collect their copays or deductibles.

Under Medicare’s payment rules, patients owe no deductible or coinsurance for covered clinical laboratory tests billed on assignment. The complaint’s waiver allegation concerned a different incentive: the benefit to the practice of offering privately insured patients testing without a bill. In return, the whistleblower alleged, doctors sent their lipid-testing business to the defendants:

The complaint called this pulling through the Medicare business. The alleged benefit began with privately insured patients, while the additional referrals brought government-paid testing to the laboratories. That is why a billing employee’s knowledge of commercial collection policies can matter in a case about Medicare claims.

The waiver and the handling fee addressed different parts of the sale. One allegedly made the practice’s patients easier to retain. The other paid the practice for sending specimens. Together, the complaints describe a laboratory competing for the physician’s entire stream of orders.

What Happened After the Settlement?

Health Diagnostic Laboratory settled the government’s physician-kickback and unnecessary-testing allegations in 2015. A separate civil trial later produced findings against HDL’s former chief executive and BlueWave’s two owners.

The corporate settlements grew out of three whistleblower cases under the False Claims Act. The government joined claims against BlueWave, its owners, HDL’s former chief executive and Berkeley HeartLab while settling with HDL and Singulex.

BlueWave Healthcare Consultants Fraud Judgment

The BlueWave Healthcare Consultants fraud judgment followed a January 2018 jury verdict against BlueWave’s two owners and HDL’s former chief executive. The owners marketed and sold HDL and Singulex testing. The jury found the three individuals responsible for causing false claims connected to HDL, and found the BlueWave owners responsible for additional Singulex claims.

The Justice Department’s account of the sales commissions described HDL and Singulex paying BlueWave according to the number of blood tests sold. The government’s case reached both the payments to referring physicians and the financial incentives behind the sales force.

The Justice Department’s account of the judgment separates the claims. The HDL portion involved 35,074 false claims to Medicare and TRICARE, worth $16,601,591. The Singulex portion involved another 3,813 false claims, worth $467,935.

The court tripled the damages, credited settlement payments received from the laboratories for the same claims, and added $63.8 million in civil penalties. The judgment entered in May 2018 totaled $114,148,661.

In April 2024, one BlueWave owner agreed to a separate settlement of more than $16 million covering the health care fraud judgment and allegations of fraudulent transfers.

What a Health Diagnostic Laboratory Insider Would Recognize

An HDL insider’s knowledge can connect the sales arrangement to the testing and the claim. The complaints identify the documents at each point: referral agreements, promises about drawing fees, panel selections, instructions for removing tests and assurances about patient bills.

A physician-office employee may know what the practice was promised and what appeared on its requisitions. A laboratory or billing employee may know what was actually performed and charged. A sales or finance employee may know how referrals affected the payments back to the practice. Those views can explain how an apparently routine panel became a recurring source of allegedly unnecessary claims.

The same pressure points appear in other laboratory cases. In True Health Diagnostics’ referral arrangements, the government alleged processing fees paid to draw-site companies and consulting payments for an advisory board that did not exist. A later settlement with its former chief executive resolved allegations involving consulting fees, processing and handling fees, and copay waivers used to induce referrals.

Genotox Laboratories supplies the panel parallel. In its 2023 civil settlement, the company admitted offering custom profiles that let providers preselect tests for all or nearly all their patients, generally in the highest reimbursement categories. That admission makes the recurring ordering mechanism concrete: a selection made once can govern testing across a practice.

For the Health Diagnostic Laboratory allegations, we would connect the panel that was offered, the physician’s instructions, the tests performed and the claims submitted with the payments or patient-cost promises that brought the business in. The person who understands why those records look the way they do can supply the missing connection.

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

You Know How the Orders Were Won

If you saw how referral payments, patient-bill promises or panel defaults shaped the testing, speak with our whistleblower experts. We build your strongest laboratory fraud whistleblower case around that inside knowledge, bring in healthcare fraud whistleblower lawyers who understand laboratory referrals and billing, and stay beside you through the case.