Magnolia Diagnostics, a clinical laboratory based in Dallas, Texas, and its owners, John Bains and Kelly Bains, have agreed to pay the US $19.2 million to resolve allegations that they violated the False Claims Act. The laboratory allegedly billed Medicare for medically unnecessary respiratory pathogen panel (RPP) testing performed on seniors receiving COVID-19 tests, according to the Department of Justice (DOJ).
Magnolia investors will pay an additional $4.8 million to resolve common law claims for unjust enrichment and payment by mistake arising from distributions they received from the laboratory.
“The Justice Department is committed to protecting taxpayer-funded programs and holding accountable those who exploit them,” says Brett A Shumate, assistant attorney general of the Department of Justice’s Civil Division, in a release. “We will pursue not only companies that submit false claims and the owners who direct the misconduct, but also investors who receive and retain its financial benefits—especially when vulnerable Americans are exploited for profit.”
The US government alleges that, beginning in April 2020, the owners devised a strategy to generate revenue by requiring senior living communities seeking COVID-19 testing to also obtain expensive RPPs. Magnolia allegedly used prepopulated requisition forms...
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