Georgia Medical Practices Settle Kickback Case Following Whistleblower Complaint

In a significant development within Georgia’s healthcare sector, multiple medical practices and a whistleblower have reached a settlement in a False Claims Act lawsuit that alleged an elaborate kickback scheme involving laboratory services.

The settlement, confirmed Tuesday by Chief Judge Leigh Martin May of the US District Court for the Northern District of Georgia, administratively closes a case that had cast a spotlight on potential conflicts of interest in medical referral practices. The joint notice of settlement was filed by whistleblower Monica McKoy along with defendants Atlanta Primary Care Peachtree PC, Newnan Family Medicine Associates PC, and Cecil Bennett.

At the heart of the allegations was a practice that federal prosecutors have increasingly targeted in recent years: physicians referring patients to laboratories in which they hold financial interests. According to court documents, the owner of the medical practices was accused of directing patient testing to laboratories they also owned, potentially violating anti-kickback statutes designed to prevent financial considerations from influencing medical decisions.

The False Claims Act, originally enacted during the Civil War and substantially strengthened in 1986, allows private citizens like McKoy to file lawsuits on behalf of the government against entities believed to be defrauding federal programs. Whistleblowers who bring successful cases can receive between 15 and 30 percent of any recovered funds.

Healthcare fraud cases involving kickback allegations have become a priority for the Department of Justice in recent years, with the agency recovering billions in settlements and judgments. The practice of physician self-referral has drawn particular scrutiny, as it creates potential incentives for unnecessary testing that drives up healthcare costs for patients and insurers, including government programs like Medicare and Medicaid.

Georgia’s healthcare sector has seen several significant False Claims Act cases in recent years. This settlement adds to a growing body of enforcement actions across the Southeast, where federal prosecutors have been particularly active in pursuing healthcare fraud cases.

The settlement terms, including any financial penalties or admissions of wrongdoing, have not been publicly disclosed. Typically, such agreements include provisions for compliance programs and monitoring to prevent future violations.

For smaller medical practices like those involved in this case, settlements can have significant operational and financial implications. Healthcare compliance experts note that even mid-sized physician groups now need robust compliance programs once expected only of large hospital systems.

The case underscores the complex regulatory environment facing medical providers who must navigate strict rules governing financial relationships within the healthcare ecosystem. The Stark Law and Anti-Kickback Statute create a web of regulations prohibiting physician self-referrals and financial incentives that might influence medical decision-making.

Healthcare fraud enforcement has remained a bipartisan priority across administrations. In fiscal year 2022 alone, the Justice Department secured over $2.2 billion in settlements and judgments from civil cases involving fraud against the government, with healthcare fraud accounting for the majority of those recoveries.

Beyond the immediate parties involved, cases like this reverberate throughout regional healthcare networks, often prompting other providers to review their own compliance programs and referral practices. Industry analysts note that enforcement actions typically trigger waves of internal audits at unrelated practices seeking to avoid similar scrutiny.

The administrative closure of the case marks the end of what was likely a lengthy investigation and negotiation process, though implementation of any compliance requirements in the settlement may continue for years to come.

Representatives for the parties involved did not immediately respond to requests for comment on the settlement terms or the allegations that prompted the lawsuit.