Former Boston Heart Diagnostics Chief Executive Officer Susan Hertzberg and former Vice President of Sales Matthew Theiler have agreed to pay a combined $1.2 million to resolve allegations that they participated in an illegal laboratory referral kickback scheme in violation of the U.S. False Claims Act and Anti-Kickback Statute.

The U.S. Department of Justice (DOJ) announced that Hertzberg and Theiler each agreed to pay $600,000 to settle claims that they caused false claims for laboratory testing to be submitted to Medicare, Medicaid and TRICARE between 2015 and 2017.

According to the government, the pair allegedly approved and implemented a scheme in which marketers offered payments disguised as managed service organization (MSO) distributions to induce physicians to refer laboratory testing business to Texas hospitals and Boston Heart Diagnostics. Some of the testing was alleged to be medically unnecessary.

In related settlements, Dr. Frederick Brown of Texas agreed to pay $309,055 to resolve allegations that he received kickbacks in exchange for ordering laboratory tests. Six marketers and their associated companies also agreed to pay a combined $550,000 to settle allegations that they paid doctors disguised kickbacks to secure laboratory referrals.

The settlements bring the total recovery in similar healthcare fraud cases involving MSO-related kickback arrangements to more than $61 million since 2019, according to the DOJ.

Federal officials said the Anti-Kickback Statute is designed to ensure medical decisions are based on patient needs rather than financial incentives. Authorities warned that kickback schemes can undermine clinical judgment, increase healthcare costs and expose patients to unnecessary services.

The settlements stem from a coordinated investigation involving the Department of Justice, the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG), and the Defense Criminal Investigative Service (DCIS).

The government noted that several of the individuals involved had also faced related criminal proceedings in the Eastern District of Texas.