Health Diagnostics’ Former CEO and BlueWave Owners Will Pay $111 Million Over Medicare Fraud

A federal judge in South Carolina has ordered the former CEO of Health Diagnostics Laboratory and the owners of BlueWave Healthcare Consultants Inc. to pay $111 million in connection with their alleged defrauding of Medicare and another government health care program.

Health Diagnostics’ Former CEO and BlueWave Owners Will Pay $111 Million Over Medicare Fraud

Although the defendants presented arguments that the penalty would be in violation of the Eighth Amendment’s excessive fines clause, the judge decided to rule against Latonya Mallory, the former CEO of the testing lab, and Floyd Dent III and Robert Johnson, who run the consultancy firm. 

Since the defendants submitted false claims for payment to the government health care programs, the False Claims Act (which establishes triple damages) permitted a judgment of over $400 million, according to the judge’s calculations, but he chose to impose a reduced financial penalty instead. 

“The judgment here passes Constitutional muster,” he said in his ruling, adding that the defendants were “liable for serious violations of the law.” 

Prosecutors claimed that Health Diagnostics Laboratory paid kickbacks to doctors in exchange for their ordering of tests, in the shape of speaking engagements, consulting contracts, and gifts. 

The arrangement had the sole purpose of boosting Health Diagnostics’ billings to government programs.

Back in January, the defendants had been found liable for defrauding Medicare out of $16.6 million through Health Diagnostics Laboratory and $468,000 through another company called Singulex. 

The defense sought to reverse that judgment on account of one of the jurors’ illegal social media posts. However, the judge found that while certain Facebook posts by the jury foreman violated court rules, they had not in any way affected the outcome of the trial.

The alleged fraud was first brought to light in a whistleblower lawsuit. The government decided to intervene in 2015. Under the False Claims Act, people with original information about fraud can file a lawsuit and share in any recoveries resulting from the ensuing investigation.

The Department of Justice states that, the whistleblower “is entitled to receive between 15 and 25 percent of the amount recovered by the government,” if the government decides to intervene. If the government decides not to intervene, “the relator’s share is increased to 25 to 30 percent.” Whistleblowers, also known as relators, who “planned and initiated the fraud” can see these awards reduced “without limitation.”

Do you know of a South Carolina Medicare or Medicaid fraud, or in any other state? You might be eligible for a reward which can be up to 30 percent of the amounts recovered as a result of your information. Call Us at 888.742.7248 or Connect Online to check your eligibility.


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