Former Texas health system CEO, CFO hit with false claims lawsuit

The former CEO and CFO of a Texas health system are among 18 defendants named in a false claims complaint, alleging violations of the Anti-Kickback Statute and Stark Law, the Justice Department announced April 4. 

The federal complaint alleges laboratory executives and employees of True Health Diagnostics and Boston Heart Diagnostics conspired with Texas hospitals, including those part of Rockdale, Texas-based Little River Healthcare, to pay physicians to refer patients to hospitals for laboratory testing. The laboratory testing was performed by True Health Diagnostics and Boston Heart Diagnostics. 

The complaint alleges the hospitals paid a portion of their laboratory profits to recruiters, who kicked back those funds to physicians. 

The laboratory tests resulting from the alleged scheme were billed to federal healthcare programs. Little River Healthcare is accused of falsely billing the tests as hospital outpatient services, according to the Justice Department. 

Little River Healthcare's former CEO Jeffrey Madison and former CFO and COO Peggy Borgfeld are named in the complaint. The former CEO of True Health Diagnostics Christopher Grottenthaler and the former CEO of Boston Heart Diagnostics Susan Hertzberg are also named defendants. 

Mr. Grottenthaler denies the allegations, his lawyer Andrew Wirmani said in a statement to Becker's Hospital Review

"The truth is True Health, at his direction, invested millions to develop a rigorous compliance program, hired top of the line compliance professionals, and even went so far as to volunteer to have the government monitor its operations," Mr. Wirmani said. "Whatever misconduct the government believes occurred did not involve my client. We are confident that the facts will demonstrate that he should never have been a part of this lawsuit."

Little River Healthcare, which included hospitals in Rockdale and Cameron, Texas, closed in 2018. 

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