Diagnostic Labs of Burbank, CA Hit with Whistleblower Suit

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Diagnostic Labs, a Burbank, CA-based clinical laboratory and radiology company that works primarily with nursing home patients, has been hit with a whistleblower suit under the False Claims Act.

According to the website California Watch, the company “provided deep discounts to skilled nursing facilities in exchange for business that can be charged to taxpayer-funded Medicare and Medi-Cal,” a practice tantamount to a kickback scheme.

Two ex-employees of the company allege that Diagnostic Labs charged nominal, heavily discounted, fees for imaging and lab services on paper in exchange for referrals from its customers (nursing homes) for additional outpatient business.

The case, which was filed in 2010, was unsealed last year. Attorneys for the defendant argue that the claim lacks a specific amount tied to a specific, quid-pro-quo incentive.