February 27, 2026. After receiving a False Claims Act qui tam complaint from the Whistleblower on April 9, 2021, the United States Department of Justice investigated and resolved the lawsuit against Atlanta Gastroenterology Associates, a healthcare provider in Atlanta, Georgia. A copy of the Whistleblower (Relator) Team’s complaint is here. A copy of the Department of Justice settlement agreement is here. A link to the Department of Justice press release is here.
The settlement resolves allegations that Atlanta Gastroenterology Associates (AGA) received kickbacks for referrals and performed gastrointestinal pathology testing services that were not medically necessary for the patients.
This settlement between the United States and AGA stemmed from these allegations.
- Beginning in May 2017, AGA entered into an agreement with APS, an anatomic pathology lab located in Little Rock, Arkansas.
- Under the agreement, APS assisted AGA with developing, constructing, and setting up a limited-capacity pathology laboratory located in AGA’s office (which APS called a “lean lab”). In that lean lab, histology technicians trained by APS and working under the direction and supervision of a medical director pathologist employed by APS would prepare slides containing patients’ biopsy specimens using chemicals or dyes called “stains.” AGA would bill the patient’s insurer for performing this “technical component” of the various clinical laboratory services, referred to herein as “stain procedures.” AGA would then mail the prepared specimen slides from their offices in Georgia to APS’s lab in Arkansas, where a pathologist employed by APS would review and interpret them. APS would bill the patient’s insurer for performing this corresponding “professional component” of the stain procedures.
- APS provided remuneration to AGA in connection with its lean lab in the form of: (a) below fair market rates for ongoing supervision and operational support of the lean lab; (b) below market rates for medical director services; and (c) free supplies unrelated to the collection, transport, processing or storage of lab specimens for APS. Both the technical and professional components of clinical laboratory services are designated health services for purposes of the physician self-referral law, 42 U.S.C. § 1395nn (commonly referred to as the “Stark Law”). The financial relationships between APS and the physicians who stand in the shoes of AGA for purposes of the Stark Law did not satisfy the requirements of any applicable exception to the Stark Law. AGA physicians’ referrals to APS for designated health services were, therefore, prohibited, and the submission of claims for the improperly referred services violated the Stark Law.
- APS provided additional remuneration to AGA in connection with its lean lab, including, but not limited to, (a) the buildout and setup of the lean lab; for example, APS provided AGA with laboratory information systems, Microsoft Surface tablets, barcode scanners, and label printers used to operate the lean lab; (b) specimen storage services; (c) supplies for use in the lab; (d) shipping; and (e) enabling AGA to bill for the technical component of the stain procedures. AGA did not compensate APS for the fair market value of this remuneration.
- The agreement between AGA and APS required AGA to exclusively refer its patients (including beneficiaries of federal healthcare programs) to APS to perform the professional component for stains created in the lean lab hosted at AGA’s office.
- As a further inducement to enter into the lean lab agreement, approximately one month before APS and AGA entered into the lean lab agreement, APS offered to hire the daughter of a physician owner and officer of AGA. She was made a fully-remote marketing manager at a salary of $180,000 per year and APS indicated that the daughter’s salary was tied to the volume of pathology referrals that AGA would be making to APS.
- APS provided the remuneration described above to induce AGA to refer patients (including beneficiaries of federal healthcare programs) to APS for the performance of the professional component of the pathology services. AGA’s knowing and willful receipt of the remuneration described above, in return for referrals, was in violation of the Anti-Kickback Statute, 42 U.S.C. § 1320a-7b(b), and AGA thus caused the submission of false claims to Medicare, TRICARE, and the VA.
- Additionally, AGA ordered certain clinical laboratory services that were not reasonable and necessary for the diagnosis or treatment of illness or injury and billed Medicare, TRICARE, and the VA for those procedures using CPT codes 88312 and 88313.
- In the field of gastrointestinal pathology, preparing a specimen using hematoxylin and eoisin dyes (known as an “H&E” stain) is a routine practice that allows the pathologist to identify and diagnose a variety of conditions. In some cases, however, a pathologist will review an H&E stain and determine that additional information is needed, so the pathologist may order additional “special stains” to confirm or rule out certain diagnoses. Special stains are called “special” because they are not necessary or appropriate for all patients.
- Following a special stain protocol implemented by the pathologists at APS who were overseeing the lean lab, AGA prepared and ordered special stains automatically (or reflexively) based on the source of the specimen biopsy (i.e., the location in the patient’s gastrointestinal system from which the specimen was taken) rather than the particular patient’s need. For example, AGA automatically prepared an Alcian Blue special stain (in addition to an H&E stain) for all esophageal specimens. The effect of these reflexive special stain orders was to drive up the volume of procedures (and corresponding revenue) for AGA and APS.
- In approximately mid-2019, AGA met with APS to address concerns that AGA was performing and billing for special stain services that were not medically reasonable or necessary. AGA provided data to APS showing that it had been ordering certain special stains over 100 times more often than other gastroenterology practices. Additionally, the special stain protocol was inconsistent with a Local Coverage Determination (L35922) issued by the Medicare Administrative Contractor for AGA’s jurisdiction. Among other things, the Local Coverage Determination (LCD) explained that reflex special stain orders or special stain orders made prior to pathologist review of a routine H&E stain were not reasonable or necessary. According to the LCD, a pathologist must review the routine H&E stain before ordering any special stain.
- AGA terminated its relationship with APS effective May 28, 2020.
Healthcare kickbacks are harmful to patients because they corrupt independent medical decision-making and prioritize financial gain over patient health and safety. When medical choices are driven by money, the integrity of the entire healthcare system is seriously compromised and patients mistrust healthcare providers.
The whistleblowers, also known as qui tam relators, were former employees of APS. The case highlighted the critical role that employees play in disclosing their concerns of potential kickbacks among healthcare organizations to the U.S. Department of Justice.
Civil prosecutors for the U.S. Attorney’s Office for Eastern District of Arkansas in Little Rock and the U.S. Department of Justice, Civil Frauds Section, are responsible for this important resolution. Whistleblower attorneys Renée Brooker and Eva Gunasekera represented the qui tam relators. Contact them at reneebrooker@tzlegal.com and eva@tzlegal.com. This settlement exemplifies the success of the False Claims Act public-private partnership between the U.S. Department of Justice and Whistleblowers to hold the healthcare industry accountable for actions that impact government programs (Medicare, Medicaid, TRICARE, VA Health, and FEHB) funded by U.S. taxpayers.