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In a case involving one of the largest individual Medicare fraud settlements ever, a Tampa area dermatologist has agreed to pay $26.1 million and is being excluded from all federal health care programs. In what the Department of Justice describes as a “watershed achievement” in healthcare enforcement, dermatologist Stephen J. Wasserman, M.D., has agreed to pay $26.1 million to resolve allegations that he violated the False Claims Act (“FCA”) by accepting illegal kickbacks from Tampa Pathology Laboratory (“TPL”) and billing the Medicare program for medically unnecessary services.

The government alleged that in 1997, Dr. Wasserman entered into an illegal kickback arrangement with TPL, a clinical laboratory in Tampa, Florida and TPL’s physician owner, in an effort to increase the laboratory’s referral business. Dr. Wasserman allegedly sent biopsy specimens for Medicare beneficiaries to TPL for testing and diagnosis. TPL then allegedly performed the professional and technical component of the work, but billed Medicare for only the technical component. TPL allegedly allowed Dr. Wasserman to sign the reports, making it appear as if he actually performed the professional component. Dr. Wasserman subsequently billed Medicare for the work and received more than $6 million in Medicare payments pursuant to this scheme. Additionally, the government maintained Dr. Wasserman performed an increased amount of skin biopsies on Medicare patients to increase TPL’s referral business. Finally, the government alleged Dr. Wasserman performed thousands of medically unnecessary adjacent tissue transfer surgeries on Medicare beneficiaries for the sole purpose of obtaining Medicare reimbursement.

The allegations resolved by the settlement were initiated by a lawsuit originally filed in 2004 under the qui tam provisions of the FCA by Alan Freedman, M.D., a pathologist who formerly worked at TPL. The United States intervened in the action by filing its own complaint in October 2010. Dr. Freedman will receive $4,060,000 of today’s settlement. The government previously settled with TPL and its owner for $950,000.

For more questions on the FCA and the role our White Collar and Government Compliance attorneys can play in developing effective compliance strategies individually tailored for your company’s needs, please contact one of the attorneys listed below.