Inform Diagnostics: EHR Subsidies, Routine Extra Tests and Self-Disclosure

In the Inform Diagnostics settlement announced in 2019, the company agreed to pay $63.5 million over alleged kickbacks involving electronic health record subsidies and free or discounted technology consulting for referring physicians. Inform, formerly Miraca Life Sciences, later reached separate settlements involving routine extra pathology tests and purchased-test arrangements with physician practices. The cases turn on three choices: how the specimen came through the door, who decided which tests to run, and what the referring practice received in return.

Inform provides anatomic pathology services to physician practices throughout the United States and has its headquarters in Irving, Texas. The Justice Department’s January 30, 2019 announcement places the change in majority ownership and the rename in 2017. Fulgent Genetics bought Inform in 2022.

EHR Subsidies and Referral Promises

The 2019 settlement resolved allegations that Miraca used EHR subsidies and technology services to obtain physician referrals, violating the Anti-Kickback Statute and Stark Law. Three whistleblower lawsuits brought the allegations to the government. Their account reaches well beyond the price of software: it describes how sales staff valued a practice, how software influenced the choice of laboratory, and how support followed the referrals.

The government said Miraca broke the conditions for donating electronic health record systems to physicians. The Department of Health and Human Services withdrew the laboratory exemptions in 2013.

Do Doctors Get Kickbacks for Ordering Tests?

The whistleblowers alleged that the benefit to the doctor was a software subsidy or free consulting, tied to sending pathology work to Miraca. In the whistleblower’s account of the donation program, sales pitches included the referrals a practice promised, the Medicare revenue and net profit those referrals would generate, and how long Medicare payments would take to repay the donation.

According to that complaint, sales directors used lower donation offers as bargaining chips, offering more support in return for more referrals. Both sides understood that the donation depended on pathology cases coming to Miraca. An internal email quoted in the complaint put the threshold in monthly case volume:

The complaint also alleged that a business analyst wrote return-on-investment and cases-per-month figures onto donation forms to decide whether a practice would receive a subsidy and how large it would be. It alleged that copies bearing those handwritten figures were destroyed.

A donation approval could show the expected return from the physician’s referrals before the laboratory ever processed the specimens. The sales forecast, the subsidy decision and the later referral volume describe successive parts of the same transaction.

The Lab-Selection Menu Listed Only Miraca

A separate whistleblower complaint alleged that Miraca’s relationship with Modernizing Medicine extended into the software physicians used to order pathology services. It described enhanced features in the vendor’s EMA platform that became available when the physician selected Miraca for the order. Selecting another laboratory meant losing those features.

The complaint described an even more direct way to influence selection during installation:

A menu offering only the sponsoring laboratory would make its preferred referral part of the ordering screen. The complaint alleged that support reinforced the arrangement: practices using Miraca’s technical specialists but sending no referrals went to the bottom of the list for training and troubleshooting.

In May 2015, it alleged, Miraca sent a technical account specialist and a sales executive to a Connecticut practice for two weeks to install and configure EMA and train the staff. The practice paid nothing for that work. After the move to EMA, its biopsy referrals to Miraca approximately doubled.

The software vendor later faced its own case. In a separate 2022 settlement, Modernizing Medicine agreed to pay $45 million over allegations that included soliciting and receiving kickbacks from Miraca in exchange for recommending and arranging use of its pathology services. That account concerns the vendor receiving the money and directing business. The Inform case concerns the laboratory paying for access to that business.

Free Consulting Could Outweigh the Pathology Service

The complaints alleged that Miraca also used free or deeply discounted consulting to help practices qualify for Medicare’s meaningful-use bonuses. The services had value to a practice even before it sent a specimen to the laboratory.

The complaint describing the EMA arrangement alleged that consulting contracts specified limited hours for a small fee, while Miraca supplied more services than the contracts promised and routinely failed to collect fees from referring practices. The earlier complaint likewise alleged that the company made virtually no effort to bill for consultations, collect payment or obtain signed agreements, despite internal objections.

The alleged effect on laboratory choice was particularly clear at a practice in Quincy, Massachusetts. According to the complaint, the practice switched to Miraca in fall 2015 from a laboratory it considered better at pathology, solely to obtain help meeting government incentive requirements. To receive that help, it had to agree to send all its patients’ specimens to Miraca.

That is the choice the allegation puts in view: a practice’s financial benefit taking precedence over its own assessment of the pathology service. For a sales, implementation or billing employee, the consulting hours actually delivered and the fees actually collected can explain more than the contract’s description of the service.

Routine Extra Tests Before Pathologist Review

Inform agreed to pay $16 million in the settlement announced July 20, 2022, resolving allegations that it billed Medicare and other federal health care programs for medically unnecessary tests. This case began with a whistleblower’s qui tam lawsuit.

According to the government’s account of the settlement, Inform admitted that between 2013 and 2018 it routinely and automatically performed additional tests on biopsy specimens before a pathologist reviewed them, without an individualized determination that the extra tests were medically necessary. The government contended that this policy produced many unnecessary tests and that Inform submitted them for payment.

The decision to do more work had already been made when the person assessing the specimen got to it.

Matching a testing protocol to the specimens and claims it affected is work we do with an insider.

The Requisition and the Test-Use Data

Model Plan Helps Laboratories Fight Fraud, published in Laboratory Medicine in 1997, described a model from the Department of Health and Human Services Office of Inspector General that paired requisition forms documenting the medical necessity of each test with analysis of the laboratory’s test-use data by billing code.

Those records illuminate different parts of an automatic-testing policy. The requisition records what the physician requested and the reason offered for it. Test-use data shows the work the laboratory repeatedly performed. Reading the two together helps us examine how a routine instruction translated into additional testing, while the specimen’s review history supplies the clinical sequence that mattered in Inform’s settlement.

Purchased-Test Arrangements and Self-Disclosure

Inform agreed to pay $2.9 million in the resolution announced December 23, 2024 over possible kickbacks in arrangements it reported itself.

According to the settlement account, Inform admitted that from 2018 through 2023 it had purchased-test arrangements with a small number of physician-practice customers. These arrangements joined the divided pathology work to a payment back to the referring practice. The purchased-test arrangements continued while Inform was settling the unnecessary-testing case.

One Service, Two Components and Other Referrals

Anatomic pathology divides into technical work preparing the specimen and professional work analyzing the slide. Under Inform’s arrangements, the physician practice performed one component and referred the other to Inform. Inform billed commercial insurers for both components and reimbursed the practice at a set price for its work.

The same customers also referred other services to Inform, including services Inform billed to Medicare and other federal health care programs. The United States contended that the purchased-test arrangements caused false claims to those programs because the claims resulted from prohibited kickbacks.

The practice received money for its component of commercially billed services while also directing federally paid work to Inform. We examine that payment relationship alongside the referrals to understand what business the laboratory received.

Inform Disclosed the Arrangements and Ended Them

Inform reported the conduct to the government in March 2024, when the government did not know about it. The disclosure included the results of an internal investigation, the potentially problematic relationships and their potential financial impact on the government. The settlement credited that disclosure, and the announcement said Inform had terminated all its purchased-test arrangements.

What the Inform Cases Show a Laboratory Insider

Our work is to connect the subsidy, testing and payment decisions to the tests and claims they affected. A sales employee may understand why a subsidy was approved. An implementation specialist may know how the laboratory-selection menu was configured. A pathologist or laboratory employee may know when extra testing began. Someone handling practice accounts may understand the component purchases and other referrals. Each perspective can explain a decision that the final bill does not show.

The whistleblower in the testing case was allocated 17% of the recovery. More broadly, a whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers.

You Know What the Arrangement Bought

If you know how a software subsidy secured referrals, why extra tests ran automatically or what a practice received for its pathology work, speak to one of our whistleblower experts. We build your strongest laboratory fraud whistleblower case with you and bring in laboratory fraud whistleblower lawyers who understand pathology testing and referral payments. We stay beside you as that inside knowledge becomes the foundation of the case.