Oncology Practice, Physicians, and Reference Laboratory To Pay Over $4 Million to Settle False Claims Act Allegations

Oncology San Antonio, PA and its affiliated physicians have agreed to pay $1.3 million, and CorePath Laboratories, PA has agreed to pay $2,746,275.22 plus accrued interest, in civil settlements with the United States and the State of Texas to resolve alleged violations of the False Claims Act.

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The United States alleged that Oncology San Antonio, a hematology and oncology practice, entered an unlawful kickback arrangement with CorePath Laboratories, a San Antonio-based diagnostic reference laboratory, in August 2016. CorePath Laboratories provided in-office bone marrow biopsy services at Oncology San Antonio practice locations and performed subsequent diagnostic testing on the biopsies. According to the United States, CorePath Laboratories agreed to pay $115 for each biopsy referred by Oncology San Antonio and its physicians. The payments for each referred biopsy were paid to the private practice entities of three Oncology San Antonio physicians.

The United States contended that the payments for referrals of biopsies constituted kickbacks within the meaning of the Anti-Kickback Statute and that the terms of the written agreement between Oncology San Antonio and CorePath Laboratories failed to meet any statutory safe harbor. The Anti-Kickback Statute prohibits offering, paying, soliciting, or receiving remuneration to induce referrals of items or services covered by a federal health care program, such as Medicare, Medicaid, or TRICARE. Claims submitted in violation of the Anti-Kickback Statute may give rise to liability under the False Claims Act.

The civil settlement with Oncology San Antonio and its physicians also resolves allegations that Dr. Jayasree Rao, through Oncology San Antonio and her own oncology and hematology practice entity, provided medically unnecessary tests, services, and treatments to Medicare, TRICARE, and Texas Medicaid beneficiaries in the San Antonio Metro Area, and billed the federal healthcare programs for the medically unnecessary tests, services and treatments.

“Illegal financial incentives to physicians undermine the integrity of our healthcare system and impair the objective judgment of the community’s healthcare professionals,” said U.S. Attorney Jaime Esparza. “These settlements demonstrate my office’s commitment to protect federal healthcare programs against such violations, as well as other efforts to defraud these programs.”

Dr. Rao and her practice entity also entered a three-year Integrity Agreement with the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG).

“Violations of the Anti-Kickback Statute involving oncology services can waste scarce federal health care program funds and corrupt the medical decision-making process,” said Special Agent in Charge Jason E. Meadows with the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG). "Individuals who participate in the federal health care system are required to obey laws meant to preserve both the integrity of program funds and the provision of appropriate, quality services to patients."

“The TRICARE Program is vital to the health and well-being of our warfighters, retirees, and their families,” said Acting Special Agent in Charge Greg Shilling of the Southwest Field Office of the Defense Criminal Investigative Service (DCIS), the law enforcement arm of the Department of Defense’s Office of Inspector General. “Today's settlement announcement highlights the steadfast commitment of DCIS and our investigative partners to holding accountable those who seek to enrich themselves by jeopardizing the healthcare of TRICARE beneficiaries and defrauding American taxpayers.”

The civil settlement with Oncology San Antonio and its physicians also resolves claims brought under the qui tam, or whistleblower, provisions of the False Claims Act by Dr. Slavisa Gasic, a physician formerly employed by Dr. Rao. The qui tam provisions of the False Claims Act permit private parties to file an action on behalf of the United States and receive a share of any recovery. The qui tam case is captioned Unites States and Texas. ex rel. Gasic v. Oncology San Antonio, P.A., and Jayasree N. Rao, M.D., No. SA-16-CV-001140-XR (W.D. Tex.).

This matter was investigated through the coordinated efforts of the U.S. Attorney’s Office for the Western District of Texas; the Office of Inspector General of the United States Department of Health and Human Services San Antonio Field Office; the Department of Defense’s Defense Criminal Investigative Service San Antonio Resident Agency; and the Office of the Attorney General of Texas Civil Medicaid Fraud Division.

Assistant U.S. Attorney Erin Van De Walle negotiated the settlements on behalf of the government.

The investigation and resolution of this matter illustrate the government’s emphasis on combating health care fraud. One of the most powerful tools in this effort is the False Claims Act. Tips and complaints from all sources about potential fraud, waste, abuse and mismanagement can be reported to the Department of Health and Human Services at 800-HHS-TIPS (800-447-8477).

The claims resolved by the settlement are allegations only, and there has been no determination of liability.