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Feds find 3 SC parties accountable for $114 million healthcare fraud scheme

Published: Mar. 8, 2021 at 11:51 AM EST
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CHARLESTON, S.C. (WCSC) - The US Attorney for the District of South Carolina says the court of appeals has affirmed their $114 million judgement against one man and two testing labs found liable for defrauding federal health care programs.

Floyd Calhoun “Cal” Dent, III, of Lexington, and his two co-conspirators will continue to be held liable for defrauding Medicare and Tricare.

The US Attorney’s Office said at Dent’s trial that two specialty laboratories Health Diagnostics Laboratory and Singulex paid commissions to Dent’s marketing firm based on the number of blood tests sold.

The commission that Dent’s marketing firm, BlueWave, was paid violated the federal Anti-Kickback Statute. 

The Attorney’s Office says they argued these volume-based commissions constituted “remuneration” intended to induce BlueWave’s sales representatives to sell as many blood tests as possible. 

Prosecutors also contended the Anti-Kickback Statute prohibited BlueWave from paying its salespeople for recommending the tests.  By paying these kickbacks, prosecutors say the defendants caused false claims to be submitted to federal healthcare programs for millions of dollars in unnecessary blood tests. 

The US Attorney’s Office says the jury agreed, and now the Fourth Circuit has affirmed the jury’s verdict in a published opinion.

“This is an important victory for patients, the Medicare Program, and American taxpayers,” Acting U.S. Attorney for the District of South Carolina M. Rhett DeHart said. “Individuals who scheme to defraud our federal health care system must be held personally accountable for their actions.  This judgment, which was affirmed by the Court of Appeals, will send a strong deterrent message that this kind of conduct will not be tolerated.  I am extremely proud of our office, particularly our Affirmative Civil Enforcement section, for its tireless work on this case.  It takes a true team effort to protect the great people of South Carolina.”

“This result underscores the department’s commitment to holding accountable those who pay improper commissions or other financial incentives,” Acting Assistant Attorney General Brian M. Boynton said. “Kickbacks undermine the public’s trust in the healthcare system and the integrity of federal healthcare programs.”

The Fourth Circuit says their attorneys “provided abundant evidence as to defendants’ knowledge and intent” to pay kickbacks. 

The court says they acknowledged that attorneys within Health Diagnostics Laboratory and BlueWave warned the defendants that paying commissions to independent contractors might well violate the Anti-Kickback Statute.  The United States also presented sufficient evidence that outside lawyers warned all three defendants about the illegality of the commissions.

The court says they found the defendants’ contention that they were entitled to a new trial based on a variety of purported legal errors in the jury instructions to be “meritless.”

The court upheld the district court’s finding, and they say cited the timing of the transfers, the nominal amount paid for the properties, the fact that the transfers were made to family members, and the fact that the transfers were made several months after Dent knew he was under federal investigation.

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