Advanced Pathology Solutions Lawsuit Over Unnecessary Medical Testing

An Arkansas pathology company and its owners have agreed to pay $30 million to resolve federal allegations that they paid kickbacks to doctors and billed Medicare and Medicaid for medically unnecessary testing.

The alleged conduct ran from 2015 through July 2022 — 7 years of claims the government says were fraudulent. The money goes back to federal healthcare programs, not to patients.

If your gastroenterologist sent your biopsy samples to Advanced Pathology Solutions during that window, there’s a real question worth asking: Were those tests ordered because you needed them, or because someone was getting paid to send your tissue there?

What the DOJ Alleges Happened to Your Healthcare Dollars

The U.S. Department of Justice filed its complaint on April 8 in the U.S. District Court for the Eastern District of Arkansas. The allegations cover two distinct schemes — and then a third one, because apparently two wasn’t enough.

• Kickbacks for referrals — APS and its owners allegedly paid gastroenterology practices to send pathology testing their way, violating federal anti-kickback law. This ran from 2015 through July 2022.
• “Lean lab” billing — APS allegedly set up limited-purpose laboratories inside gastroenterology practices nationwide, letting those practices bill Medicare and Medicaid for preparing and staining biopsy slides — work the government alleges generated false claims.
• Commission-based referrals for nerve testing — From November 2018 through November 2020, the DOJ alleges CEO Kevin Hannah paid a man named Richard Sorgnard volume-based commissions to steer patients toward epidermal nerve fiber density (ENFD) testing.

The named individuals in the settlement are current and former owners Kevin Hannah, Donell Burkett, and Daniel Hunter Pledger, along with the company’s management services organization, APS MSO LLC.

The DOJ notes that the claims resolved by this settlement are allegations only — no court has determined liability.

What This Means If You Were a Patient

This settlement recovers taxpayer money. It does not create a claims portal for individual patients, and no consumer compensation fund has been identified.

Thirty million dollars back to the government. Zero dollars back to the people whose tissue samples were processed.

That said, the structure of the alleged fraud raises a clinical question that goes beyond billing:

• If a test was ordered because of a financial arrangement rather than medical necessity, was the result acted on appropriately?
• Were unnecessary procedures performed based on those results?

If you’ve ever sat in a follow-up appointment being told you need another test and wondered why, this is the version of that story where the wondering turns out to be warranted.

Those questions don’t have answers in the public record yet. But they’re worth raising with your doctor if you received pathology testing through a gastroenterology practice between 2015 and 2022 and want to understand why specific tests were ordered.

What You Can Do

1. If you’re a patient who received pathology testing through a gastroenterology practice in that period, ask your doctor’s office which lab processed your specimens and whether any testing was flagged as unnecessary.
2. If you have information about healthcare billing fraud, report it to the Department of Health and Human Services Office of Inspector General at oig.hhs.gov/fraud/report-fraud. The False Claims Act allows private individuals to file whistleblower suits — and collect a share of any government recovery.
3. If you believe you were harmed by unnecessary medical procedures, consult a healthcare attorney about whether a separate civil claim is available to you. The government’s False Claims Act recovery does not preclude individual patient claims.

If Advanced Pathology Solutions billed Medicare or Medicaid for tests you didn’t need, report it to the HHS Office of Inspector General — or tell us about it.

Written by: Companies Behaving Badly

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