A Mars resident is among 18 defendants charged by the U.S. Justice Department in an alleged kickback scheme involving referrals for hospital laboratory testing in Texas.

In U.S. District Court for the Eastern District of Texas, the Justice Department filed a complaint alleging violations of the False Claims Act, Anti-Kickback Statute and the Stark Law.

Matthew Theiler, of Mars, a former vice president of sales for Boston Heart Diagnostics Corporation, is among those charged. Most of the other defendants live in Texas. One resides in New York.

Laboratory executives and employees at True Health Diagnostics (THD) and Boston Heart Diagnostics Corporation (BHD) allegedly conspired with small Texas hospitals, including Little River Healthcare (LRH), to pay doctors to induce referrals to the hospitals for laboratory testing, which was then performed by BHD or THD, according to the Justice Department.

The complaint alleges that the hospitals paid a portion of their laboratory profits to recruiters, who kicked back those funds to the referring doctors. The recruiters allegedly set up companies known as management service organizations to make payments to referring doctors that were disguised as investment returns, but were actually based on and offered in exchange for the doctors’ referrals, according to the department.

BHD and THD executives and sales force employees leveraged the kickbacks to doctors to increase referrals and their bonuses and commissions, according to the department. The complaint alleges that laboratory tests resulting from this referral scheme were billed to various federal health care programs, and that the claims not only were tainted by improper inducements, but also involved tests that were not reasonable and necessary. To increase reimbursement, LRH falsely billed the laboratory tests as hospital outpatient services, according to the department.

The complaint also alleges that certain THD employees participated in schemes to pay other forms of kickbacks, including processing and handling fees to draw site companies, monthly fees to a top-referring doctor, disguising the payments as consulting fees for participating on THD’s advisory board, even though no such board existed, and waiving patient co-payments and deductibles meant to ensure that patients share in and help control the amounts billed to federal health care programs. These kickbacks allegedly were paid to induce referrals to Medicare, Medicaid and TRICARE, the U.S. military health care program, for laboratory testing, including laboratory tests that were not reasonable and necessary, according to the department.

The Anti-Kickback Statute prohibits offering, paying, soliciting or receiving remuneration to induce referrals of items or services covered by Medicare, Medicaid and other federally funded programs. The Stark Law forbids a hospital or laboratory from billing Medicare for certain services referred by physicians that have a financial relationship with the hospital or laboratory. The Anti-Kickback Statute and the Stark Law seek to ensure that medical providers’ judgments are not compromised by improper financial incentives and are instead based on the best interests of their patients.

“Paying kickbacks to physicians distorts the medical decision-making process, corrupts our health care system and increases the cost of health care funded by the taxpayer,” said U.S. Attorney Brit Featherston for the Eastern District of Texas.