According to the settlement, Alliance Family of Companies LLC (Alliance), a national electroencephalography (EEG) testing company based in Texas, will pay $13.5 million to resolve allegations that it submitted or caused to be submitted false claims to federal health care programs that resulted from kickbacks to referring physicians or that sought payment for work not performed or for which only a lower level of reimbursement was justified. The settlement also resolves allegations against Texas-based private investment company Ancor Holdings LP (Ancor), which will pay over $1.8 million for causing false billings resulting from the kickback scheme through its management agreement with Alliance.

“Kickbacks and inflated billings result in the misuse of critical federal health care program funds,” said Acting Assistant Attorney General Brian M. Boynton of the Department of Justice’s Civil Division. “The Department of Justice will collaborate with our agency partners to protect federal health care programs by pursuing those who knowingly claim public funds to which they are not entitled.”

“This settlement should put health care providers on notice that we will hold accountable those who seek to profit by pursuing kickbacks and other improper billing schemes,” said Acting U.S. Attorney Jennifer B. Lowery for the Southern District of Texas. “This office, in coordination with its law enforcement partners, will use all available resources to pursue those who defraud these federal programs and to protect our nation’s health care system.”

“This settlement is an example of strong federal partnerships working to protect federal health care programs that are relied upon by so many beneficiaries,” said Special Agent in Charge Miranda L. Bennett of the Department of Health and Human Services Office of Inspector General (HHS-OIG), Dallas Region. “We will continue working with our law enforcement partners to investigate kickback schemes that undermine the integrity of the Medicare and Medicaid programs.”

“As the investigative arm of the Department of Defense Inspector General, the Defense Criminal Investigative Service is dedicated to protecting the integrity of Department of Defense programs such as TRICARE, the health care system for our service members, retirees, and their families,” said Acting Special Agent in Charge Gregory P. Shilling of the Defense Criminal Investigative Service (DCIS) Southwest Field Office. “Today’s settlement highlights the teamwork with our federal and state partners in rooting out fraud to protect our critical program and preserve American taxpayer resources.” 

“This settlement demonstrates our commitment to safeguarding the Federal health care programs from fraud,” said Norbert E. Vint, Deputy Inspector General Performing the Duties of the Inspector General of the U.S. Office of Personnel Management Office of Inspector General (OPM-OIG). “I would like to thank our staff, law enforcement partners and the Department of Justice for their efforts to protect the Federal Employees Health Benefits Program from those who would seek to defraud the program through improper and illegal billing practices.”

Alliance provides ambulatory EEG testing services for patients referred by physicians and other health care providers to diagnose certain neurological conditions. The United States alleged that Alliance induced physicians to order the company’s EEG testing by providing kickbacks in the form of free EEG test-interpretation reports, thereby enabling primary care physicians who were not neurologists to bill the government as if they had interpreted the tests. The government also alleged that Alliance used an inaccurate billing code for certain EEG testing to generate higher reimbursements and billed for a specialized digital analysis that it did not actually perform. The United States alleged that Ancor learned of the kickbacks based on due diligence it performed prior to investing in Alliance and then caused false claims by allowing that conduct to continue once it entered into an agreement to manage Alliance.

Under the terms of the settlement, Alliance will pay $13,022,356 and Ancor will pay $1,780,349 to the federal government to resolve their liability under the False Claims Act. In addition, Alliance will pay $477,643 and Ancor will pay $64,369 to state Medicaid programs. Alliance is obligated to pay additional amounts if certain financial contingencies occur within the next five years and forego any claim to over $390,000 in suspended payments that it would otherwise be owed by Medicare. 

In connection with the settlement, Alliance entered into a five-year Corporate Integrity Agreement with HHS-OIG, setting forth requirements for future compliance.

The settlement resolves claims brought under the qui tam or whistleblower provisions of the False Claims Act in six actions. Under the Act’s qui tam provisions, a private party can file an action on behalf of the United States and receive a portion of the settlement if the government reaches a monetary agreement with the defendant. The qui tam actions subject to the settlement are all pending in the Southern District of Texas and are captioned United States ex rel. Mandalapu, et al. v. Alliance Family of Companies, Inc., et al., No. 4:17-cv-00740; United States ex rel. Fuller v. Respiratory Sleep Solutions, et al., No. 4:17-cv-01197; United States ex rel. Calcanis v. Alliance Family of Companies, Inc., et al., No. 4:19-cv-1497; United States, et al. ex rel. Jane Doe v. Alliance Family of Companies, LLC, et al., No. 4:19-cv-1213; United States, et al. ex rel. McKay v. Alliance Family of Companies, LLC, et al., No. 4:18-cv-1949; and United States, et al. ex rel. Krasnov v. Alliance Family of Companies, LLC, et al., No. 4:19-cv-4886. Relators Mandalapu and Chava will receive $2,962,850 of the federal settlement proceeds as their share of the government’s recovery, plus a share of any additional recoveries should the financial contingencies occur. 

The resolutions obtained in this matter were the result of a coordinated effort between the Civil Division’s Commercial Litigation Branch, Fraud Section, and the U.S. Attorney’s Office for the Southern District of Texas, with assistance from the U.S. Attorney’s Office for the Middle District of Florida; HHS-OIG; FBI; DCIS; OPM-OIG; and the state attorneys general and Medicaid Fraud Control Units.   

Trial Attorneys Michael Hoffman and Sarah Loucks of the Civil Division’s Commercial Litigation Branch (Fraud Section), and Assistant U.S. Attorney Kenneth Shaitelman of the Southern District of Texas are handling this case. 

The investigation and resolution of this matter illustrates the government’s emphasis on combating health care fraud. One of the most powerful tools in this effort is the False Claims Act. Tips and complaints from all sources about potential fraud, waste, abuse and mismanagement can be reported to the Department of Health and Human Services at 800-HHS-TIPS (800-447-8477).

The claims resolved by the settlement are allegations only, and there has been no determination of liability.