Singulex: Referral Fees in One Case, Diagnosis-Code Pressure in Another

In the Singulex fraud settlements, the laboratory agreed to pay $1.5 million in 2015 over alleged referral kickbacks and unnecessary testing, and $1.25 million in 2018 over alleged diagnosis-code manipulation and medically unnecessary tests. The first case concerned money offered to referring physicians. The second concerned pressure on providers and changes to their test orders. Someone inside a laboratory or physician practice may recognize one of those arrangements without ever seeing the other.

Singulex was a laboratory testing company based in Alameda, California. Its earlier settlement appeared alongside Health Diagnostic Laboratory in a cardiovascular-testing announcement. Its later case concerned claims to Medicare and TRICARE, including allegations that codes went onto laboratory orders without the provider’s knowledge or consent.

The 2015 Referral-Fee Allegations

The Justice Department’s April 9, 2015 announcement alleged that Singulex and Health Diagnostic Laboratory paid physicians to send them blood-testing business. The department described processing and handling fees of $10 to $17 per referral, routine waivers of patient co-pays and deductibles, and medically unnecessary tests billed to federal health care programs, including Medicare.

BlueWave Healthcare Consultants was the marketing company in that account. The government alleged that the laboratories conspired with BlueWave to offer the inducements. It also joined the whistleblower lawsuits against Berkeley HeartLab over similar referral-payment allegations. The payment to the practice and the claim to the government were connected: the alleged financial incentive brought in the referral, and the resulting tests generated the bill.

That is why the fee’s label matters. Processing and handling sounds like payment for work on a specimen. The government’s allegation was that the money bought the physician’s decision about where to send testing. According to the government, those incentives sent patients for unnecessary tests and left taxpayers paying the bill.

The $48.5 million announcement covered both laboratories. Health Diagnostic Laboratory’s settlement was $47 million. Singulex’s smaller agreement was its own resolution within that joint announcement, which grew out of three related whistleblower actions under the False Claims Act.

The companies also agreed to separate corporate integrity agreements with the Department of Health and Human Services’ Office of Inspector General. Those agreements called for procedures and reviews intended to prevent and promptly detect similar conduct.

The Sales Pitch Joined the Fee to the Next Panel

The whistleblower complaint described a conversation with a BlueWave representative that put the alleged offer in practical terms: a payment to the physicians, repeat panels and no patient payment. The allegation expressly named both laboratories:

The pitch put a future testing schedule into a conversation about what the practice would earn. It also offered to remove the patient’s bill from the conversation. According to that allegation, the practice could keep ordering panels while the laboratories accepted the insurance payment.

For an insider, that connection is more revealing than the processing-fee label on its own. What the sales representative promised about the next order belongs beside what the practice received for the last one.

The 2018 Diagnosis-Code Allegations

The second Singulex settlement concerned alleged interference with the clinical information and test selections behind the claim. In its August 29, 2018 announcement, the Justice Department alleged that Singulex caused false claims to Medicare and TRICARE by pressuring providers to select diagnosis codes without regard to the patient’s medical condition, or adding those codes without the provider’s knowledge or consent.

The allegations went beyond diagnosis codes. The government also alleged that Singulex pressured providers to order tests without regard to medical necessity, made misrepresentations to persuade them to order additional tests, and added procedure codes to requisition forms without their knowledge or consent.

Those details describe different changes to the same order. A diagnosis code supplies the claimed clinical reason for testing. A procedure code identifies the service. The allegation was that Singulex influenced both what would be tested and the information used to support payment for it.

The government joined the whistleblower case. Its account placed the alleged conduct at the point where the provider’s medical decision became a laboratory order and then a federal healthcare claim. The information used to justify the bill could, according to the allegations, include the laboratory’s own additions without the provider’s approval.

The Diagnosis Had to Come From the Provider

Medicare’s laboratory billing instructions tie the diagnosis code to information from the ordering clinician. When a physician supplies a narrative diagnosis rather than a code, the laboratory may use that information to select the appropriate code. It may also ask the physician for missing diagnostic information. The clinical basis still has to come from the provider.

The OIG’s laboratory compliance guidance addressed the tempting shortcut directly. It told laboratories not to create diagnostic information because it had triggered reimbursement before, and not to use programs that automatically inserted diagnosis codes without information from the ordering physician or another authorized person.

The claimed medical reason for the test was itself part of the alleged scheme.

An order, the information sent with it and the eventual claim can therefore tell different stories. In a case like this, we examine where they diverged and who directed the change. The person who understands how a requisition moved through the laboratory may know something the final billing record cannot explain on its own.

The Panel and the Form Were Already Known Pressure Points

Laboratory compliance guidance addressed physician decisions about individual tests long before either Singulex settlement. The 1997 Laboratory Medicine article Model Plan Helps Laboratories Fight Fraud described an OIG model plan that recommended requisition forms with space for the physician to document the medical necessity of each test through a diagnosis code.

The article also described recommendations for annual notices explaining the components of laboratory profiles and how they would be billed. For customized profiles, it described physician acknowledgment forms. For standing orders, it described monitoring to ensure that the orders remained valid. The attention was on the decisions hidden inside a convenient ordering arrangement: which tests the physician selected, what each was for and whether the continuing order still held.

That history helps explain why a panel, a repeat-testing schedule and a diagnosis field belong in the same account. In the earlier Singulex complaint, the alleged pitch connected physician payments to repeat panels. In the later government announcement, the alleged pressure reached the diagnosis and procedure codes on the order. Each involved the laboratory’s influence over what ultimately became a claim for patient care.

The referral arrangement was also visible from the worker’s side. In a separate complaint against Labcorp, whistleblowers alleged that a physician received processing payments from Health Diagnostic Laboratory and Singulex while Labcorp paid the employee who actually performed the processing services. That allegation puts the payment label against the work: who received the fee, and whose employee handled the specimen.

What Proof Do You Need as a Whistleblower?

For a laboratory case involving referral fees or altered orders, we work with you to connect the payment, the provider’s decision and the claim.

For the referral arrangement, we examine the promised payment alongside the work it supposedly covered and the testing it encouraged. For the coding arrangement, we compare what the provider supplied with what the laboratory used and what it billed.

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

You Saw What Changed the Order

If you saw a referral payment drive testing or a diagnosis appear without the provider’s approval, talk with our whistleblower experts about the laboratory practice you know. We build your strongest laboratory whistleblower case with you and bring in laboratory fraud whistleblower lawyers who understand referral arrangements, medical necessity and the billing behind them. You bring the view from inside the business, and we stay beside you through the pursuit of the case.