Arkansas
Arkansas pathology lab, owners to pay $30M to settle kickback allegations
LITTLE ROCK, AR (KATV) — A North Little Rock pathology lab and several of its current and former owners are paying $30 million to settle federal allegations that the company used unlawful kickbacks and ordered testing that wasn’t medically necessary.
Advanced Pathology Solutions PLLC, formerly known as Advanced Pathology Solutions LLC, and its management services organization, APS MSO LLC — together referred to as APS — agreed to the settlement with the United States. The agreement also includes current and former owners Kevin Hannah, Donell Burkett and Daniel Hunter Pledger.
“Healthcare referrals must be based on the best decision for patients, not the influence of kickbacks,” said Assistant Attorney General Brett A. Shumate of the Justice Department’s Civil Division. “This settlement demonstrates the Department’s commitment to hold accountable both corporations and individuals who profit from improper kickback arrangements and who burden federal healthcare programs with claims for medically unnecessary services.”
The settlement resolves allegations laid out in a federal complaint filed April 8 in the U.S. District Court for the Eastern District of Arkansas. The United States alleged that from 2015 through July 2022, APS and its owners violated the False Claims Act by providing unlawful kickbacks to gastroenterology practices to induce referrals of pathology testing to APS, resulting in false claims to federal health care programs.
According to the complaint, APS and its owners developed a business model that involved setting up and managing limited-purpose laboratories — known as “lean labs” — inside gastroenterology practices nationwide. Those practices could bill for preparing and staining biopsy specimen slides, while the slides were then shipped to APS’s lab in North Little Rock for pathologist interpretation and review. Federal officials alleged that in exchange for various benefits furnished by APS, the gastroenterology practices agreed to exclusively refer their patients to APS, creating improper financial relationships that amounted to kickbacks.
“Fraud against the taxpayer is rampant and insidious and when discovered must be held accountable. Engineering kickbacks to result in unnecessary medical testing which is then paid for by the United States taxpayer is unacceptable and once discovered as with APS, will result in lengthy investigation and review, and ultimately a significant settlement amount as demonstrated by this settlement,” said U.S. Attorney Jonathan D. Ross for the Eastern District of Arkansas. “Our office will continue to work with Main Justice to detect and deter any similar schemes and then hold the wrongdoers accountable under the law.”
The United States also alleged APS and its owners submitted — and caused the submission of — claims to federal health care programs for unnecessary testing. Specifically, the government said APS directed lean lab personnel to automatically order certain special tests, called “special stains,” before a pathologist reviewed a routine test, a hematoxylin and eosin stain, to determine whether additional testing was needed. The complaint alleged the protocol led to special stains that were not medically reasonable and necessary and were ineligible for Medicare coverage or reimbursement. In many cases, the government said APS also ordered additional “confirmatory” immunohistochemical testing that was not medically necessary.
“Kickbacks and medically unnecessary testing don’t just violate the law — they endanger patients and drain critical federal health care funds,” said Acting Deputy Inspector General for Investigations Scott J. Lampert of the U.S. Department of Health and Human Services Office of Inspector General. “Schemes like this erode trust in the health care system and divert resources away from those who truly need care. HHSOIG will move swiftly and aggressively with our law enforcement partners to uncover these abuses and hold every responsible party accountable.”
In addition to the allegations in the April 8 complaint, the settlement also resolves claims that from Nov. 1, 2018, to Nov. 30, 2020, APS and CEO Kevin Hannah knowingly and willfully provided unlawful kickbacks to Richard Sorgnard through volume-based commission payments to induce referrals for epidermal nerve fiber density testing. The United States contends APS paid Sorgnard 4% of all payments APS collected for ENFD testing he referred, and that the arrangement violated the Anti-Kickback Statute and resulted in false claims under the False Claims Act. Sorgnard previously entered into a settlement with the government to resolve related claims.
“Any entity that participates in health care and reaps illicit profits by taking advantage of and violating the trust given by Medicare and Medicaid programs must be held accountable,” said U.S. Attorney Troy Rivetti for the Western District of Pennsylvania. “This settlement is notice that such illegal conduct simply will not be tolerated.”
As part of the resolution, APS entered into a five-year Corporate Integrity Agreement with the U.S. Department of Health and Human Services Office of Inspector General. The agreement requires APS to implement auditing and accountability provisions, including a compliance program, training and education requirements, and a review of physician referral relationships.
The complaint followed three lawsuits originally filed under the whistleblower provisions of the False Claims Act, which allows private parties to sue on behalf of the United States and potentially receive a portion of the recovery. The consolidated cases are United States ex rel. Watkins v. Advanced Pathology Solutions, No. 4:20-cv-1110 (E.D. Ark.); United States ex rel. Aucoin v. Advanced Pathology Solutions, No. 4:21-cv-277 (E.D. Ark.); and United States ex rel. Paulsen v. Advanced Pathology Solutions, LLC, No. 3:22-cv-00652-JPG (E.D. Ark.).
The settlement comes after a $4.75 million settlement reached earlier this year with Atlanta Gastroenterology Associates, a former APS client.
The Justice Department’s Civil Division, Commercial Litigation Branch, Fraud Section and the U.S. Attorney’s Office for the Eastern District of Arkansas are handling the matter, along with the U.S. Attorney’s Office for the Western District of Pennsylvania. The matter was handled by Fraud Section attorneys Evan Ballan, Jeff McSorley and Kelley Hauser, Assistant U.S. Attorney Jamie Goss Dempsey for the Eastern District of Arkansas, and Assistant U.S. Attorney Paul Skirtich for the Western District of Pennsylvania.
Officials also pointed to broader federal efforts to combat health care fraud, noting that tips about potential fraud, waste, abuse and mismanagement can be reported to HHS at 800-HHS-TIPS (800-447-8477).
LITTLE ROCK, Ark. – New updates from the Arkansas Department of Agriculture are now giving Arkansas residents an option to take preventative action against New World Screwworm.
Though no detections have been reported in Arkansas, livestock and animal owners can now submit suspected reports of New World Screwworm using the department’s online reporting form.
Users will be able to upload photos and location information. After submission, staff will follow up with instructions for next steps. Suspect cases may also be reported through a veterinarian or by calling the Arkansas Department of Agriculture.
Department officials recommend isolating affected animals and avoid moving any animals off the premises if New World Screwworm is suspected.
The department also updated animal entry requirements in Arkansas, requiring all warm-blooded animals entering the state from an infested state to be accompanied by an Interstate Certificate of Veterinary Inspection dated within seven days of entry.
Officials said the certificate must include the statement: “All animals in shipment were inspected and found free of evidence of NWS infestation.”
The department encourages animal owners to watch for wounds that fail to heal, foul-smelling discharge, tissue damage or visible maggots in or around a wound.
Livestock animals are also encouraged to get a valid Premises Identification Number (PIN). It is required for interstate and intrastate animal movement from a New World Screwworm Infested Zone.
LITTLE ROCK, Ark. (KATV) — Governor Sarah Huckabee Sanders is backing a half-million-dollar funding request to help keep the state’s public television network on the air. And despite months of debate over Arkansas TV’s future, lawmakers didn’t waste time moving the request forward today.
The request sailed through a legislative panel Tuesday without a single question or objection.
The $500,000 in one-time state funds would help Arkansas TV tackle aging infrastructure, including transmitters that reach nearly three-quarters of the state’s population.
Arkansas TV leaders say some of the equipment is so old it can no longer be repaired, meaning if it fails, parts of the state could lose service.
The vote comes just weeks after lawmakers rejected a separate proposal to help cover PBS-related costs, but supporters say this plan focuses on protecting the network’s long-term operations and keeping Arkansas viewers connected.
Senator Bart Hester framed the moment as a shift in priorities, saying, “We believe in the direction things are headed. Focus more on what Arkansans are doing, what’s happening in Arkansas.”
And on the question of whether smooth sailing will continue when the full Legislative Council takes it up Friday, Hester didn’t dodge the reality of politics, saying, “You always expect some push back anytime you spend a significant amount of money. I suspect there may be some Friday, but debate is good. Democracy is good. This is a good thing for the state of Arkansas and I’m glad we’re doing it.”
The Governor’s Office released the following statement tying the funding to both partnership and direction
“Governor Sanders is grateful to the legislature for partnering with outside supporters to support Arkansas TV, and she looks forward to working with Arkansas TV leadership to ensure the broadcaster highlights the Natural State and aligns with Arkansas values.”
The funding request now heads to the full Legislative Council Friday.
LITTLE ROCK (KATV) — The State Board of Election Commissioners is planning to petition the U.S. Supreme Court to take up a case regarding its rule prohibiting electronic signatures on Arkansas voter registrations.
When the State Board of Election Commissioners banned electronic signatures on voter registrations in 2024, Get Loud Arkansas, a nonprofit that had been using an online platform to register voters, was quick to sue.
Get Loud said it had initially received the green light from state officials to register voters with e-signatures before the rule change. The group believes the state’s shifting stance to be politically motivated.
“After saying multiple times that this was okay? Why did they change their mind? I can speculate, but that’s a question best answered by them,” Kathy Webb, executive director of Get Loud Arkansas and a Little Rock City Board member, said.
But the SBEC says it implemented its ban on e-signatures because of fraud concerns as well as equality, as most Arkansas counties did not accept e-signatures on voter registrations. The board says the rule change addressed that ambiguity.
“Some county clerks were accepting them, some county clerks were not accepting them. So, you had differences in how registrants were treated depending on which county you were in. So the board took the position to adopt a rule to require the wet signature on a piece of paper,” Chris Madison, director of the State Board of Election Commissioners, told KATV.
But the legal battle has not gone the state’s way. Courts have sided with Get Loud and allowed it to use its online voter registration tool. In May, the 8th Circuit Court of Appeals refused the state’s request to hear the case. As a result, the board was left with three options: accept defeat, go to trial in district court, or try to take the case to the U.S. Supreme Court.
“We’ve had similar cases in two other circuits, in the Fifth Circuit and the 11th Circuit, where those circuits found that the signature requirement was material, meaning it serves a legitimate purpose. The trial court and the 8th Circuit’s two-to-one decision said that the rule that was adopted by the State Board is not material. So, there’s a circuit split. And those are the types of cases that the Supreme Court takes up,” Madison said.
So far, the board has spent $90,000 fighting the lawsuit out of $250,000 allocated by the Legislature. If the Supreme Court takes up the case, more money will likely need to be allocated.
“It’s the Super Bowl. It’s the Supreme Court. I mean, you get the good lawyers that do those types of cases and, you know, there’s a potential for more costs,” Madison said.
“I don’t understand why we want to spend more taxpayer dollars to fight making it easier to help people register to vote,” Webb told KATV.
The deadline for the State Board of Election Commissioners to file its petition asking the U.S. Supreme Court to hear the case is in August.
Arkansas is one of eight states that does not have online voter registration.
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