Laboratory Kickback Fraud Settlements

In a sweeping crackdown on healthcare fraud, former True Health Diagnostics CEO Christopher Grottenthaler has agreed to pay $4.25 million to resolve allegations of Laboratory Kickback Fraud Settlements to physicians for lab test referrals. The Department of Justice also secured $1.8 million in additional settlements from two doctors and seven marketers across Texas, accused of disguising kickbacks as investment distributions through Managed Service Organizations (MSOs).

The scheme involved payments masked as consulting fees, handling charges, and copay waivers, targeting federally funded programs including Medicare, Medicaid, and TRICARE. Despite internal warnings about legal risks, Grottenthaler allegedly continued the practice, prompting whistleblower STF LLC to file suit under the False Claims Act.

Physicians Hong Davis and Elizabeth Seymour were implicated for accepting payments in exchange for directing tests to labs in Texas and Massachusetts. Marketers from True Health and Boston Heart Diagnostics also settled, with some facing parallel criminal charges.

These settlements bring the DOJ’s total recovery in MSO-related lab fraud cases to over $59 million, underscoring the government’s aggressive stance against schemes that compromise patient care and misuse taxpayer funds.

“Kickbacks to doctors can undermine medical decision-making and squander taxpayer money,” said DOJ Civil Division’s Brett A. Shumate.

The case remains active against other defendants. Allegations are civil in nature, with no admission of liability.