South Carolina Labtech Diagnostics and CEO Settle Kickback Allegations with $6.8 Million Payment

Labtech Diagnostics, a clinical laboratory based in Anderson, South Carolina, and its founder and CEO, Joseph Labash, have agreed to pay at least $6.8 million to settle allegations of illegal kickbacks to physicians.

This settlement brings the total civil recoveries related to Labtech to over $11.5 million, including amounts recovered from nine doctors.

In addition to the civil settlement, Labtech has agreed to plead guilty to five counts of offering and paying healthcare kickbacks in violation of the federal Anti-Kickback Statute.

Under the terms of the criminal plea agreement, Labtech will also pay $103,551.90 in restitution.

According to federal officials, between August 2018 and November 2021, Labtech and Labash allegedly paid doctors kickbacks disguised as office space rental, phlebotomy, and toxicology fees to induce laboratory testing referrals.

Prosecutors allege that these payments were concealed through hand-delivered money orders, falsified contracts, and fraudulent certification forms.

Additional allegations involve inflated equipment purchases and the provision of free services and supplies to medical practices in exchange for referrals.

U.S. Attorney Bryan Stirling for the District of South Carolina emphasized the importance of prioritizing patient care over financial incentives.

“Every dollar spent, and every decision made in healthcare must prioritize the patient’s wellbeing and care,” Stirling said.

“We will continue to work with our partners to pursue those engaged in illegal kickback schemes and hold them accountable.”

The settlement also resolves claims tied to a whistleblower lawsuit filed by relator Mahmod Altwam under the qui tam provisions of the False Claims Act.

Altwam will receive $1.36 million from the settlement proceeds.

Federal officials emphasized that, except for admissions made as part of the criminal resolution, the civil claims remain allegations and there has been no determination of liability.

In a related development, Quest Diagnostics acquired substantially all assets of Labtech Diagnostics in December 2021, expanding its presence in the Southeast and integrating Labtech’s Anderson laboratory into its national network.

This acquisition marked Quest’s first full-service laboratory in South Carolina, aiming to broaden access to diagnostic innovation and insights for communities in the region.

These developments underscore the federal government’s commitment to combating healthcare fraud and ensuring that medical decisions are made in the best interests of patients, free from improper financial incentives.

Healthcare providers are reminded of the serious consequences associated with violating the Anti-Kickback Statute and the False Claims Act.

Patients and healthcare professionals are encouraged to report any suspected fraudulent activities to the appropriate authorities to maintain the integrity of the healthcare system.