On June 17, 2026, the Department of Justice showed its ongoing commitment to healthcare fraud enforcement when it announced a $30 million settlement of three qui tam complaints alleging illegal kickbacks and unnecessary medical testing by Advanced Pathology Solutions PLLC (formerly an LLC) and its former owners. DOJ had intervened in the three lawsuits under the whistleblower provisions of the False Claims Act (FCA) a few months prior to the settlement. Under the FCA, private parties may file an action on behalf of the United States and receive a portion of the recovery.
In addition to the monetary payments, APS entered into a five-year Corporate Integrity Agreement that requires it to implement auditing and accountability provisions, including a compliance program, training and education requirements, and review of physician referral relationships.
The settlement targeted three sets of alleged violations.
First, the complaint in intervention alleged that, from 2015 through July 2022, the defendants knowingly and intentionally paid gastroenterology practices illegal compensation in exchange for patient referrals. In brief, APS set up limited-purpose laboratories, known as lean labs, that it managed within gastroenterology practices. The arrangements benefited the practices by allowing them to bill for preparing and staining biopsy specimen slides. In exchange, the complaint alleged, the gastroenterology practices agreed to exclusively send their patients’ slides to APS for pathologist interpretation and review. Because these services were paid for by federal healthcare programs, the AKS applied and prohibits such kickbacks.
Second, the settlement resolves allegations that for a two-year period ending in 2020, APS and its CEO Kevin Hannah provided unlawful kickbacks through volume-based commission payments that were designed to induce the recipient to drive patient referrals to APS for certain testing. The resulting claims for payment for the testing were allegedly tainted by the AKS violation and thus false claims.
Third, on a slightly different note, the defendants allegedly submitted and caused the submission of claims for unnecessary pathology testing. According to the complaint, DOJ alleged that the defendants were pressuring providers to automatically order special tests immediately instead of waiting for the results of the routine initial testing that is used to determine whether follow up is required. By jumping this standard step, the defendants allegedly ordered unnecessary tests.
We already teased the first key takeaway above. Healthcare fraud enforcement is alive and well, and it remains a priority focus of the DOJ. That’s no surprise. Healthcare fraud has consistently been a top focus for federal enforcement efforts, and it has consistently generated enormous headlines for both DOJ and the courageous whistleblowers who are often key to bringing the allegations to light.
Other takeaways have to do with the specific violations here. Cases involving medically unnecessary procedures (including testing) are often difficult to prove, so having the insider information from the various whistleblowers here was surely key to demonstrating that the defendants faced enough risk to warrant settlement. In addition, the allegedly mandatory and automatic ordering of complex tests is a relatively obvious violation of the law, making it easier to build a case than some medical-necessity cases that require expert analysis on a patient-by-patient basis.
Finally, a few thoughts about kickbacks. They’re sadly common in healthcare, because the enormous amount of money moving through the system means there is a strong temptation to try to direct the flow of government payments into one’s own pockets. Redirecting Medicare and Medicaid payments may feel like playing with someone else’s money, but it is really everyone’s money. DOJ has signaled repeatedly that it will go after kickback schemes, and we need whistleblowers to help identify and root it out.
Fortunately, kickback schemes often involve enough people that a whistleblower is not unlikely. Indeed, whistleblowers filed three different complaints about the alleged schemes leading to this settlement, setting up one final takeaway. If you are aware of a potential kickback violation and are considering bringing it to the government, don’t wait. Experienced counsel can help you determine if you face risk under the first-to-file rule, which says that only the first whistleblower to bring a scheme to light will receive an award.
If you are aware of kickbacks, unnecessary testing or procedures, or any other fraud in other healthcare settings, contact Whistleblower Partners to learn more about how you can help stop it.
