A Missouri-based healthcare laboratory and three of its owners agreed to pay approximately $13.6 million to settle charges levied by the Department of Justice (DOJ) of violating the False Claims Act by improperly billing Medicare for tests that were not ordered or medically necessary.

Gamma Healthcare and the owners, Jerry Murphy, Jerrod Murphy, and Joel Murphy, agreed to pay the civil penalty, while the company, Jerry Murphy, and Jerrod Murphy also agreed to a 15-year ban from participating in federal healthcare programs, the DOJ announced in a press release Wednesday.

The settlement resolves claims brought under the qui tam provisions of the False Claims Act by Bradley Bibb, a physician whose clinics provided services to patients for whom Gamma performed laboratory tests. Bibb will receive about $2.3 million from the settlement.

The details: From January 2020 to October 2020, Gamma and the Murphys submitted or caused to be submitted claims to Medicare for medically unnecessary laboratory tests that were not ordered by treating physicians, the DOJ alleged.

When a physician ordered a urine sample analysis, Gamma automatically performed and submitted claims for payment to Medicare for a urinary tract infection (UTI) panel of tests, which had higher reimbursements, according to the settlement agreement.

Additionally, Gamma’s requisition forms were structured in a way that did not allow physicians to opt out of the UTI tests.

Compliance considerations: In April 2018, Gamma agreed to pay $525,000 to settle a separate case for allegedly submitting false claims to Medicare for the transportation of laboratory specimens.

As part of the settlement, the company entered into a five-year corporate integrity agreement (CIA) with the Department of Health and Human Services’ (HHS) Office of Inspector General that required it to hire a compliance officer and assemble a compliance committee, among other undertakings. The CIA ended in December 2021, according to HHS records.

Gamma closed its lab and radiology business in November 2020.

Legal counsel for Gamma did not respond to a request for comment. The company agreed to settle without admitting liability.