Nursing home lab and X-ray company to pay $18 million whistleblower settlement

Share this content:

One of the nation's largest providers of laboratory and X-ray services to skilled nursing facilities has agreed to pay $17.5 million to settle a whistleblower lawsuit alleging Medicare fraud, the U.S. Department of Justice recently announced.

The case involves Kan-Di-Ki LLC, which does business as Diagnostic Laboratories and Radiology. The alleged scheme involved offering discounted Medicare Part A services to California SNFs, which decreased costs for the facilities and allowed them to maximize profits. In return, the SNFs referred people to Diagnostic Labs for outpatient services covered by Medicare Part B and Medi-Cal, the California Medicaid program, according to the charges. The company then allegedly overcharged these programs to make up for the discounts it was giving SNFs for Part A services.

Kan-Di-Ki believes it would have won if the case had proceeded to a jury trial, but such a trial would not have been worth the time and costs, the company told the Bureau of National Affairs.

The two whistleblowers, former Kan-Di-Ki employees Jon Pasqua and Jeff Hauser, will receive about $3.8 million of the money recovered by the federal government.