Pathology Fraud: Who Ordered the Stain, the Review and the Extra Test?

Pathology fraud is a form of healthcare fraud that includes billing for unnecessary stains and cancer tests, charging for interpretations without the required analysis, and paying to secure biopsy referrals. The decisions can happen before a pathologist reads the slide. A laboratory protocol adds the stain, a software subsidy steers the specimen, or a billing system charges for work the report never describes. If you work at the bench, read the slides, handle the claims or manage the referring practice, you may know who made those decisions and what happened when someone questioned them.

Special Stains Before the Pathologist Reads the Slide

Automatic special stains can turn a patient-specific decision into a standing source of billable work. The timing matters because the routine slide review supplies the information the pathologist needs to decide whether to add a stain.

Advanced Pathology Solutions, an anatomic pathology laboratory in Arkansas, and its owners agreed to a $30 million settlement of allegations of kickbacks and unnecessary testing. The Justice Department’s June 2026 settlement announcement described the government’s allegations about limited-purpose laboratories, known as lean labs, inside gastroenterology practices. The complaint alleged that benefits from the company secured exclusive referrals: the practices billed for preparing and staining biopsy slides, then shipped them to the company’s laboratory for interpretation.

The government alleged that Advanced Pathology Solutions directed personnel in these lean labs to order special stains automatically, before a pathologist reviewed the routine hematoxylin and eosin stain. It also alleged unnecessary additional immunohistochemical testing on samples the laboratory received. In the government’s account, the decision to do more testing had already been made before the person assessing its necessity had read the routine slide.

Piedmont Pathology illustrates the same sequence. In a 2017 settlement, the practice agreed to pay $601,000 over allegations involving medically unnecessary procedures billed to Medicare and Medicaid. The government alleged that Piedmont Pathology performed medically unnecessary special stains on certain gastric biopsies before a pathologist reviewed the routine slide. Special stains were separately billable, putting the cost of the alleged unnecessary work on Medicare and Medicaid and the taxpayers who fund them. A pathologist who had worked at Piedmont brought the qui tam case.

The referring practice was also part of the enforcement story. The Advanced Pathology Solutions announcement reported an earlier $4.75 million settlement in 2026 with Atlanta Gastroenterology Associates, a gastroenterology practice and former client of Advanced Pathology Solutions. The laboratory’s agreement followed the client’s settlement. A practice manager’s view of the arrangement matters alongside the pathologist’s.

For a pathologist, the key comparison is the time of review against the time the additional stain was ordered. For a technician, it is the protocol that made the additional work automatic. Those records address the same decision from different sides of the bench.

From the Specimen to the Claim

A pathology claim connects work that different people may order, perform, interpret and bill. Following the same specimen through those records shows where an extra service entered the process.

The requisition identifies the requested work. The clinical record explains the patient’s problem and the ordering clinician’s intent. We connect that request to the specimen and tests performed through the laboratory’s accession and work records. The pathologist’s report records the interpretation. The claim identifies the services charged to the payer.

The clinical explanation can sit outside the laboratory, in the treating clinician’s records. That makes the clinician’s request and the laboratory’s claim a useful comparison.

The laboratory needs physician-supplied diagnostic information supporting the diagnosis it reports. Software that inserts a code because it previously secured payment changes the claim without supplying the missing clinical reason.

For the insider, the connection is concrete: the original request, the added test, the report and the paid claim. We examine those together with the instructions that caused the same choice to recur.

Reflex Testing Depends on Who Set the Condition

Pathology reflex testing puts the original order and the trigger for additional work at the center of the inquiry. We examine who selected that trigger and how the patient’s result led to the added test. The treating clinician’s chart and the laboratory’s request may hold different parts of that decision.

Requisition design can shape that decision before the specimen arrives. Model Plan Helps Laboratories Fight Fraud, published in Laboratory Medicine in 1997, described the government’s recommendations for forms that let physicians document the necessity of each test. It also described explaining the components and billing of test profiles to ordering physicians, confirming their understanding of customized profiles, and monitoring standing orders for continued validity.

That historical article gives today’s reader a useful comparison: what the clinician understood the order to include against what the laboratory actually performed and billed. A form, a profile and a billing rule can each carry a different version of the same request.

FISH Testing Without the Treating Physician’s Order

Bostwick Laboratories’ former owner allegedly directed the laboratory to bill Medicare and Medicaid for unnecessary FISH cancer-detection tests and other tests performed without the treating physicians’ consent or orders. The Justice Department’s 2016 account of the allegations described conduct from 2006 through 2011. It also described discounts and billing arrangements allegedly used to induce physicians to refer business.

For a laboratory employee who sees FISH added after an initial result, the records to connect are the original request, the result that triggered the additional work and the authority for that decision. The Bostwick allegations put the order and the referral incentive in the same case.

Who Performed the Pathology Work and Who Billed It?

Pathology billing can separate the technical work of preparing a specimen from the professional work of interpreting it. The distinction matters when the referring practice, a management company and the pathologist have different financial interests in the service.

The technical component covers processing, sectioning, staining, equipment and technician work. The professional component covers the pathologist’s interpretation. These components can be billed separately and purchased from another provider. The split therefore directs attention to who did each part of the work, who supplied it to the biller and what the biller charged.

Surgical pathology and other services involving physician work fall under the physician fee schedule, a different payment category from the Clinical Laboratory Fee Schedule. We follow the preparation and interpretation separately to identify who supplied the work and who collected for it.

The lean-lab example makes the split visible. The government alleged that gastroenterology practices billed for preparation and staining while Advanced Pathology Solutions received the slides for interpretation. Its allegations connected that division of work to the benefits offered for exclusive referrals.

We examine what the payment buys, who performs the work and who bills for it, alongside the referral relationship. A per-slide invoice, a payment for interpretation and a payment for sending a biopsy answer different questions.

When the Referral Comes With a Financial Benefit

Pathology referral payments can reach a practice through software, consulting services or a fee for each biopsy. The financial record explains why the specimen went to that laboratory and who benefited from sending it there.

EHR Subsidies and Technology Support

Inform Diagnostics, formerly Miraca Life Sciences, agreed to pay $63.5 million in a 2019 settlement over alleged improper financial relationships with referring physicians. The government described electronic health record subsidies and free or discounted technology consulting services.

The alleged benefit sat inside the referring practice’s operations. The government alleged that the practice received software support or a reduced technology expense as an inducement to send the laboratory its specimens. For someone in sales or practice management, the relevant comparison is the support promised, what the practice paid and the referrals expected in return.

The settlement concerned historical arrangements under donation rules that had conditions for laboratories. The government alleged those conditions were violated and noted that the Department of Health and Human Services withdrew the laboratory exemptions in 2013.

A Price for Each Biopsy

CorePath Laboratories allegedly agreed to pay Oncology San Antonio and its physicians $115 for each biopsy referred. That arrangement was among the allegations addressed in the government’s account of their settlements.

Here the payment formula supplies a direct connection between the specimen and the money. A biopsy referral appears on one side of the arrangement and the agreed payment on the other. The contract, referral records and payment calculations let us examine what the laboratory was buying.

Commissions on the Testing Revenue

The Advanced Pathology Solutions settlement also covered a separate allegation involving epidermal nerve fiber density testing. The government alleged that a marketer encouraged providers to order that testing and received 4% of the payments the laboratory collected on the referred work.

The order, the claim payment and the commission calculation connected the participants. That is why a referral inquiry reaches beyond the pathology report to management agreements, invoices and sales compensation. Rent or consulting fees may supply another label for the payment. What matters to the investigation is the service actually provided and the business expected in return.

Princeton Pathology Services: Alleged Billing Without Written Analysis

Princeton Pathology Services agreed to pay $2.4 million in 2021 to settle allegations involving claims for pathologist analysis without the required written support. The government’s account of the CPT 85390-26 claims described missing written substantiation in the medical records and billing for analysis of tests that did not require it.

The physician who brought the whistleblower complaint alleged that he discovered the billing problem after his own emergency-room visit. His account put the order, the service and the charge side by side:

The whistleblower alleged that the tests never happened. The government alleged that the written analysis was missing. For an insider who knows the reporting system, the missing interpretation connects the professional service billed to the work behind it.

What Evidence Is Needed to Prove Fraud?

The useful evidence shows where the order, work and claim diverged, and who directed that choice. We connect the clinical and billing records with you, including the referral payments that may explain why the work went to that laboratory.

The laboratory’s policies and communications can explain why a discrepancy repeats. A technician may know which instruction required the stain. A billing employee may know how the additional service reached the claim. A health care practice manager may know what was promised in return for the referrals. We bring those accounts together around the actual work and payments.

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

You Know How the Extra Test Got There

If you know who ordered the extra stains, approved the billing or paid for the referrals, speak with our whistleblower experts about your pathology case. We work beside you to connect the clinical decisions to the money and build the strongest case your evidence supports. We bring in pathology fraud whistleblower lawyers who understand laboratory billing and referral arrangements, and stay with you through the process.