Carolinas lawyers involved in $50M whistleblower settlement

A pair of lawyers from the Carolinas played a role in securing more than $50 million in payments to settle three whistleblower suits against two medical blood-testing companies accused of paying kickbacks to doctors.

William Tuck, a solo practitioner in Darlington, and James Wyatt of Wyatt & Blake in Charlotte represented whistleblowers Scarlett Lutz and Kayla Webster, both of South Carolina, in one of the successful suits.

Lutz, a medical biller, and Webster, a nurse, uncovered the scheme while working for a doctor who was steering numerous patients to Health Diagnostic Laboratory for testing in exchange for secret payments of up to $20 per referral, according to Tuck.

He said Lutz realized that something was up after one of the doctor’s practices filed for bankruptcy and she began receiving its mail, which included checks that listed patient names.

“My clients were very brave coming forward. They were concerned about losing their livelihoods,” Tuck said. “But both knew that what was going on was wrong and they wanted to see the wrong righted.”

Their suit was filed in 2013 in the U.S. District Court in Charlotte but later moved to the federal court in Beaufort, where it was settled April 9. The complaint alleged that Virginia-based HDL and another diagnostic company, Singulex of California, charged sham process and handling fees to pay doctors across the country in exchange for referrals.

The alleged scam was immensely profitable for HDL, which reached $420 million in revenue within three years of its formation in 2010. Singulex was involved in the scheme between 2010 and 2014, but offered smaller kickbacks, according to the suit.

The government – and, ultimately, taxpayers – footed the bill for the tests and fees, which were covered by Medicare and Medicaid.

The whistleblower suit was brought under the False Claims Act and does not involve private insurers, but they also have gone after HDL and Singulex, according to Tuck. He said that Cigna has an $80 million lawsuit pending against HDL.

Under the settlement deal, HDL has agreed to make more than $50.4 million in fixed payments to the government along with various contingencies that could push the total to $100 million, according to a statement from the Philadelphia law firm of Pietragallo, Gordon, Alfano, Bosick & Raspanti, which also represented Lutz and Webster. Singulex has agreed to pay $1.5 million and could be on the hook for another $11.6 million in contingencies.

The government also has intervened in a similar and ongoing suit against another company, BlueWave Healthcare Consultants, and its founders, and has a pending action against the former CEO of HDL.

Follow Phillip Bantz on Twitter @SCLWBantz

QUI TAM – FALSE CLAIMS ACT

Case name: United States et al ex rel. Lutz and Webster v. HDL et al

Court: U.S. District Court, Beaufort

Case No. 9:14-cv-00230

Judge: Richard Gergel

Date of settlement: April 9

Amount: $50.4 million in fixed payments from HDL and $1.5 million in fixed payments from Singulex

Attorneys for plaintiff: William Tuck, Darlington; James Wyatt of Wyatt & Blake, Charlotte; and Marc Raspanti of Pietragallo, Gordon, Alfano, Bosick & Raspanti, Philadelphia

Attorneys for defendants: N/A