Whistleblower Lawsuit Leads to $371 Million Judgment in Laboratory Fraud Case

In December 2019, Jacqueline Cushing filed a False Claims Act (FCA) complaint, which has now resulted in a $371,489,616 damages award through a default judgment entered on September 21, 2023. The judgment was issued against Tomoka Medical Lab, Inc.; Rajen Shah; Golden Rule Management, LLC; Tennessee Valley Regional Laboratory, LLC; Luminus Diagnostics, LLC; and United Diagnostics, LLC for laboratory testing fraud. The lawsuit alleged that the defendants submitted false claims to federal healthcare programs for laboratory services that were not ordered by a licensed healthcare provider.

Details of the Fraud Scheme

Ms. Cushing, who worked as the Operations Manager for Tomoka Medical Lab, Inc. in Ormond Beach, Florida, discovered fraudulent billing practices shortly after starting her role in August 2019. She observed that when a healthcare provider ordered a basic urinalysis with culture and sensitivity, the defendants routinely ignored these orders and instead directed the lab to perform and bill for a more expensive Urine PCR test.

• CMS reimbursement for a standard urinalysis with culture and sensitivity: Approximately $20
• CMS reimbursement for a Urine PCR test: Between $450 – $500

Upon further investigation, Ms. Cushing found that this fraudulent upcoding practice extended beyond Florida, occurring at multiple laboratory locations across different states.

Whistleblower Action and Legal Outcome

When Ms. Cushing became aware of the fraud, she reported it internally and attempted to correct the improper billing practices. However, the defendants refused to change their conduct. Recognizing the widespread financial impact on government healthcare programs, she contacted Wilbanks & Gouinlock, LLP and filed her FCA complaint.

Her actions helped expose and halt a multi-state fraud scheme that cost government healthcare programs hundreds of millions of dollars.

Read more from the U.S. Department of Justice: DOJ Announcement.