United States Obtains $140 Million in False Claims Act Judgments against South Carolina Pain Management Clinics, Drug Testing Labs, and Substance Abuse Counseling Center
Acting United States Attorney M. Rhett DeHart announced today that the United States District Court for the District of South Carolina has entered $140 million in default judgements against a group of South Carolina pain management clinics, drug testing laboratories, and a substance abuse counseling center. This combined judgment is one of the largest ever False Claims Act judgments in the District of South Carolina.
Specifically, a default judgment entered on September 2, 2021, for the United States against Oaktree Medical Centre, P.C., FirstChoice Healthcare, P.C., Labsource, LLC, Pain Management Associates of the Carolinas, LLC, and Pain Management Associates of North Carolina, P.C. totals $136,025,077. It follows a July 20, 2020 default judgment in this matter in the amount of $4,269,084.78 against ProLab, LLC and ProCare Counseling Center, LLC. The Court entered these judgments after these defendants failed to defend against the United States’ allegations.
In its Complaint, filed on May 31, 2019, the United States alleged the pain management clinics and drug testing laboratories – all of which were owned or operated by chiropractor Daniel McCollum – provided illegal financial incentives to doctors and mid-level providers to induce the referrals of urinary drug tests, in violation of the Stark Law and the Anti-Kickback Statute. The United States also alleged the pain management clinics, laboratories, and a substance abuse counseling clinic billed federal healthcare programs for unnecessary urinary drug testing. Finally, the United State alleged the pain management clinics billed or caused to be billed false claims for steroid injections, opioid prescriptions, and lidocaine ointment prescriptions because the injections and prescriptions were medically unnecessary and/or lacked a legitimate medical purpose.
McCollum answered the United States’ Complaint and remains a party to the ongoing litigation.
Congress passed the Stark Law and the Anti-Kickback Statute to prevent financial incentives from improperly influencing medical decision-making, which can lead to excessive and unnecessary tests and services. Among other things, the Stark Law prohibits billing Medicare for laboratory testing services referred by a physician who has a financial relationship with the laboratory. The Anti‑Kickback Statute prohibits offering or paying anything of value to induce the referral of items or services covered by federal health care programs, including laboratory testing services.
“Improper financial relationships between health care providers and laboratories can lead to overutilization and increase the cost of health care services paid for by the taxpayers,” said Acting Assistant Attorney General Brian M. Boynton of the Department of Justice’s Civil Division. “We will continue to ensure that health care decisions are based on the needs of patients rather than the financial interests of providers.”
“Patients should not have to question whether their doctor recommended a test or procedure for personal gain,” said Acting U.S. Attorney DeHart. “For years, these companies used improper financial incentives to generate healthcare provider referrals. This $140 million judgment is a cautionary tale of why health care fraud does not pay.”
The civil settlement includes the resolution of claims brought under the qui tam or whistleblower provisions of the False Claims Act by Donna Rauch, Muriel Calhoun, Brandy Knight, Karen Mathewson, and Tracy Hawkins, former employees of pain management clinics owned or operated by McCollum. Under those provisions, a private party can file an action on behalf of the United States and receive a portion of any recovery.
The qui tam cases are captioned United States ex rel. Rauch, et al. v. Oaktree Medical Centre, P.C., et al., No. 6:15-cv-01589-DCC (D.S.C.); United States ex rel. Mathewson v. Dr. Daniel A. McCollum, et al., No. 6:17-CV-01190-DCC (D.S.C.); and United States ex rel. Hawkins v. Pain Management Associates of the Carolinas, LLC, et al., No. 8:18-cv-02952-DCC (D.S.C.).
The resolution obtained in this matter was the result of a coordinated effort between the Justice Department’s Civil Division, Commercial Litigation Branch, Fraud Section, and the United States Attorney’s Office for the District of South Carolina, with assistance from the Federal Bureau of Investigation, the Department of Health and Human Service’s Office of Inspector General, the South Carolina Attorney General’s Office, and the Defense Criminal Investigative Service.
The investigation and resolution of this matter illustrates the government’s emphasis on combating healthcare 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).