Repercussions of Old Boston Heart Lab Test Kickback Case Still Being Felt

With a recent $2 million settlement, the U.S. Department of Justice (DOJ) has now pulled in tens of millions of dollars related to the decade-plus-old Boston Heart Diagnostics case, which centered around alleged kickbacks to doctors for sometimes unnecessary lab tests.

In addition to civil settlements, company executives were convicted in a criminal trial for their roles in the kickback scheme.

The case began with two whistleblower lawsuits, the first of which was filed in 2012 and re-filed in 2016. It alleged that Boston Heart “provided illegal kickbacks in several forms” to doctors and clinics in order to induce them to refer Medicare business to the lab company.

DOJ picked up the case, alleging that between 2015 and 2017, the Massachusetts-based company — known for comprehensive cardiovascular testing — partnered with small hospitals in Texas, including critical access hospitals, collaborating with the hospitals’ independent marketers. Those marketers set up companies known as marketing service organizations (MSOs) to make payments to referring physicians that were disguised as investment returns.

The physicians allegedly referred patients to the Texas hospitals and Boston Heart for lab tests, which were then billed to federal insurance programs, pulling in large amounts of money, the DOJ said.

In 2019, Boston Heart agreed to pay almost $27 million to settle those alleged physician kickback claims, as well as claims about improper billing to federal insurers.

“This company created lots of complex relationships to try to hide what it was doing, and that is illegally paying kickbacks for medical referrals,” a federal prosecutor said in a press release at the time.

But that wasn’t the end of the settlements. Last September, DOJ announced that another lab CEO, along with two physicians and several marketers, would pay more than $6 million to settle allegations of their involvement in kickback and improper billing schemes.

The latest $2 million settlement involves former Boston Heart CEO Susan Hertzberg and former vice president of sales Matthew Theiler paying more than half of that figure to resolve allegations around kickbacks. One physician and several marketers also agreed to payments in order to resolve claims against them.

For Hertzberg and Theiler, the settlement of those civil claims is separate from the criminal case against them. In 2023, after a 7-week-long trial, they were convicted, along with three others, of healthcare kickback conspiracy. That case is currently being appealed.

In the most recent press release, DOJ alleged that “Hertzberg and Theiler allegedly knew that marketers using MSOs were recruiting doctors to order testing performed by Boston Heart for a hospital in Texas and were given a ‘strong recommendation’ to ‘reel this in’ and ‘stand down on all hospitals,’ particularly in Texas.”

“Nevertheless, Hertzberg allegedly approved, and Theiler allegedly implemented, an expansion of the Texas hospital arrangement to another hospital to continue working with many of the same marketers,” the DOJ stated.

It appears that through the investigation of the Boston Heart case, other related schemes involving MSOs came to light. In its most recent press release, DOJ said it has brought in more than $61 million since 2019 in settlements involving “kickbacks to healthcare providers disguised as MSO investment distributions, including recoveries from over 50 physicians.”

The DOJ, current Boston Heart president Patrick Noland, and attorneys for those named in the most recent settlement didn’t respond to requests for comment from MedPage Today.

However, a 2019 statement from Noland, who became president of Boston Heart in April 2017, emphasized that his was now a completely different company.

“We are pleased to put behind us legacy issues relating to qui tam lawsuits dating in some respects as far back as 2012,” Noland said. “Boston Heart is a very different organization today compared to what it was then.”