Recent False Claims Act settlements highlight compliance deficiencies

The U.S. Department of Justice (DOJ) and the Department of Health and Human Services (HHS) have been unambiguous in their continued efforts, along with whistleblowers, to combat health care fraud. Since the beginning of June, there have been several False Claims Act (FCA) settlements spanning a variety of types of fraud in the health care sector. Below is a synopsis of three (3) cases:

• June 1: Laboratory Kickback Settlement. A former laboratory chief executive officer, former laboratory sales representatives, marketers and a physician have agreed to pay nearly $2.1 million to settle FCA and Anti-Kickback Statute (AKS) allegations. Specifically,

“Susan Hertzberg — the former CEO of Boston Heart Diagnostics Corporation (Boston Heart), a laboratory in Framingham, Massachusetts — agreed to pay $600,000 to resolve allegations that she caused false claims for laboratory testing to Medicare, Medicaid, and TRICARE from 2015 to 2017. Likewise, Theiler, Boston Heart’s former VP of Sales, also agreed to pay $600,000 to resolve allegations that he caused false claims for laboratory testing to Medicare, Medicaid, and TRICARE from 2015 to 2017. Hertzberg and Theiler allegedly agreed to a kickback scheme in which marketers, including Boston Heart’s own employees, offered and paid doctors kickbacks disguised as MSO distributions to induce the doctors’ referrals to Texas hospitals for laboratory testing performed by Boston Heart, including medically unnecessary testing. Hertzberg and Theiler allegedly knew that marketers using MSOs were recruiting doctors to order testing performed by Boston Heart for a hospital in Texas and were given a “strong recommendation” to “reel this in” and “stand down on all hospitals,” particularly in Texas. Nevertheless, Hertzberg allegedly approved, and Theiler allegedly implemented, an expansion of the Texas hospital arrangement to another hospital to continue working with many of the same marketers.

In addition, the settlements announced today resolve the United States’ allegations in the lawsuit that Dr. Brown solicited and received kickbacks in violation of the Anti-Kickback Statute from laboratory marketers’ purported MSOs in return for laboratory testing referrals. Dr. Brown agreed to pay $309,055 to resolve allegations that from November 2015 to November 2017, he received thousands of dollars in payments from two purported MSOs, Ascend MSO of TX LLC and Indus MG LLC, in return for ordering laboratory tests from Little River Healthcare, a critical access hospital in Rockdale, Texas, and True Health Diagnostics LLC, a clinical laboratory in Frisco, Texas.”

The “kicker”? “The civil settlement amounts that Hertzberg, Theiler, Dr. Brown, Hickman, and Hardaway agreed to pay were in addition to amounts they were ordered to pay in a criminal proceeding captioned United States v. Susan Hertzberg, et al., No. 6:22-cr-3-JDK (E.D. Tex.).”

• June 3: Medicare Advantage Settlement. In the interest of full disclosure, the author of this article represented Dr. Oristaglio. A $56 million settlement was reached that involved more than one FCA case for allegations of false or invalid diagnosis codes to Medicare Advantage plans, thereby skewing the risk-adjustment scores, causing increased payments by the Government. “Matrix will pay $36.5 million to resolve claims in a qui tam action filed in the Southern District of New York. HealthFair, which was acquired by Matrix, will pay $5 million and Ekbatani will pay $15 million to resolve claims in a qui tam action filed in the Eastern District of Texas.”
• June 8: Default Order for FCA allegations related to prescriptions. In late-May 2026, a U.S. District Court Judge entered a default judgment for the United States for over $3.4 million against a pharmacist and related professional corporation for FCA violations. For those unfamiliar, a default judgment is a court order in favor of the plaintiff should a defendant fail to respond to a court summons. As the DOJ stated in its Press Release,

“In its complaint, filed on October 31, 2025, the United States alleged that Kicken owned and operated AMC P.C. d/b/a Campbell Drug in Oshkosh, Nebraska, and sought to unjustly enrich herself by submitting fraudulent billing to Medicare and Medicaid. The complaint alleged that Kicken sought reimbursement from Medicaid for prescription drugs for which valid prescriptions were never issued, billed Medicaid for prescription drugs that were never dispensed, and billed Medicare and Medicaid for name-brand medications (with higher reimbursement rates) when Kicken dispensed generic versions of the same medications. It was further alleged that Kicken knew such actions and billing methods were improper, but she continued to do so for monetary benefit.”

For organizations and individual providers alike, now is a good time to assess compliance with fraud, waste and abuse laws and HIPAA. A fundamental starting point is 42 CFR § 483.85, which provides a framework for creating or maintaining an effective compliance program. Given that the primary purpose of the FCA is returning ill-gotten monies to the federal fisc and the Government’s continued enforcement of health care fraud, taking steps now, which may include returning monies to the Government with the advice of knowledgeable counsel in order to receive cooperation credit, may mitigate additional fines.

Rachel V. Rose, J.D., MBA, advises clients on compliance, transactions, government administrative actions and litigation involving health care, cybersecurity, corporate and securities law, as well as False Claims Act and Dodd-Frank whistleblower cases. She also teaches bioethics at Baylor College of Medicine in Houston. Rose can be reached through her website, www.rvrose.com.