As a legal professional working in the healthcare sector, I continually emphasize the importance of regulatory compliance to my clients. A recent case reaffirms this counsel.

BestCare Laboratory Services LLC, a defunct Texas-based clinical laboratory, along with its owner and founder, Karim A. Maghareh, have agreed to an additional settlement of $5.7 million to resolve an outstanding False Claims Act judgment. This development, which came to light on August 1, 2023, exemplifies the serious implications of disregarding federal laws that govern the billing of government healthcare programs.

The saga of BestCare and Maghareh began when the company and its owner were found guilty of knowingly submitting inflated claims to Medicare in 2018. These claims pertained to travel allowance fees, which were significantly overstated compared to the actual distance traveled by the lab technicians during specimen collection from nursing homes in Texas. Such fraudulent behavior has led to a prolonged legal battle and significant financial repercussions.

In the latest settlement, BestCare and Maghareh are required to pay $5.7 million, with potential additional annual payments for five years based on Maghareh’s future income. This is in addition to the $789,652 that the United States has already collected since the 2018 judgement. These figures are a sobering reminder of the financial consequences of healthcare fraud.

The case was initially brought to light in 2008 by whistleblower Richard Drummond under the qui tam provisions of the False Claims Act. This provision allows private parties to sue on behalf of the U.S. government if they suspect fraudulent claims for government funds. As a result of his role in exposing the fraud, Drummond will receive $1,311,000 from the settlement.

This case underscores the gravity with which the Justice Department treats healthcare fraud. The government is resolved to protect taxpayer funds from misuse and fraudulent claims, especially those intended for vital medical services.

U.S. Attorney Alamdar S. Hamdani for the Southern District of Texas further reiterated the societal implications of such misconduct. The fraudulent manipulation of Medicare not only strains the system financially but also negatively impacts access to necessary healthcare services for the most vulnerable, such as the elderly.

As healthcare lawyers, we must recognize the increasing vigilance of government agencies in identifying and prosecuting healthcare fraud. This case exemplifies the significant role of the False Claims Act as a tool for uncovering fraud, and underlines the need for meticulous compliance in billing practices for government healthcare programs.

The case at hand was successfully resolved due to coordinated efforts among the Justice Department’s Civil Division, Commercial Litigation Branch, Fraud Section; the U.S. Attorney’s Office for the Southern District of Texas, Affirmative Civil Enforcement Section; and the Department of Health and Human Services, Office of Inspector General.

The formal reference for the case is United States ex rel. Drummond v. BestCare Laboratory Services LLC and Karim A. Maghareh, Case No. 4:08cv2441 (S.D. Tex.).

As we reflect on this case, let’s remind ourselves of the fundamental rule in healthcare: honesty is not only ethically correct, but it is also the best business practice. The path to regulatory compliance is not always easy, but with due diligence, proper oversight, and adherence to ethical standards, healthcare entities can avoid similar pitfalls and ensure the continuity of quality patient care.