A Silsbee physician has been added to a federal case related to an alleged healthcare scheme involving hospitals, laboratories, and illegal kickbacks for patient referrals.

“The Department of Justice is committed to holding accountable health care providers, including physicians, who commit fraud,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division in the release. “Improper financial arrangements involving physicians and laboratories can distort physicians’ medical judgments, waste taxpayer dollars and subject patients to unnecessary testing or other services.”

The amended complaint alleges Doyce Cartrett, Jr., M.D., of Silsbee, and five other physicians violated the False Claims Act’s Anti-Kickback statute and Stark Law, a news release from the U.S. Attorney’s Office for the Eastern District of Texas said on Thursday.

According to the news release, Cartrett received over $320,000 in the scheme, which the complaint further alleges caused claims to be improperly billed to federal health care programs for medically unnecessary laboratory testing.

Two men from Southeast Texas were previously named among nearly 20 defendants in the federal case.

Related: Beaumont, Lumberton men accused of healthcare fraud

True Health Diagnostic’s former Director of Strategic Accounts and Management Service Organization recruiter, Stephen Kash, of Beaumont was among those previously named in the complaint were. Owner and operator of Ascend Professional Management Inc., Ascend Professional Consulting Inc., and BenefitPro Consulting LLC, William Todd Hickman, of Lumberton was also named in the complaint.

“Schemes that funnel health care referrals do not work without the participation of physicians,” said U.S. Attorney Brit Featherston for the Eastern District of Texas. “They are not merely passive players in these elaborate schemes, but an integral part, without which the scheme could not exist. Our office is committed to rooting out health care fraud by pursuing all players involved the scheme, from the laboratories and their leaders to the marketers and the physicians who make it all possible. Naming these physicians in the complaint is evidence of that commitment.”

The 154-page federal complaint alleges laboratory executives and employees at True Health Diagnostics LLC and Boston Heart Diagnostics Corporation allegedly conspired with small Texas hospitals, including Rockdale Hospital doing business as Little River Healthcare, to pay doctors to induce referrals to the hospitals for diagnostic testing, which was then performed by laboratories companies, the release said.

The complaint also alleges that the hospitals paid a portion of their laboratory profits to recruiters, who in turn kicked back those funds to the referring doctors. The release said the recruiters set up "Management Service Organization" companies to make payments to referring doctors disguised as investment returns, which were actually based on, and offered in exchange for, the physicians’ referrals,” the release said.

The complaint alleges that laboratory tests resulting from this referral scheme were billed to various federal health care programs, and that the claims not only were tainted by improper inducements but, in many cases, also involved tests that were not reasonable and necessary.

Cartrett allegedly received thousands of dollars from Little River Healthcare, Ascend MSO of TX LLC (Ascend) and another MSO known as Eridanus MG LLC (Eridanus) in return for his referrals. The United States has already recovered more than $31 million relating to conduct involving BHD, THD and LRH, including False Claims Act settlements with 29 physicians, two health care executives and a laboratory company.

The Anti-Kickback Statute prohibits offering, paying, soliciting or receiving remuneration to induce referrals of items or services covered by Medicare, Medicaid and other federally funded programs. The Stark Law forbids a hospital or laboratory from billing Medicare for certain services referred by physicians that have a financial relationship with the hospital or laboratory, according to the release.

“The Anti-Kickback Statute and the Stark Law seek to ensure that medical providers’ judgments are not compromised by improper financial incentives and are instead based on the best interests of their patients,” the release said.

Special Agent in Charge Miranda L. Bennett of the U.S. Department of Health and Human Services Office of Inspector General stated patients deserve reasonable and necessary care from providers without improper motivations.

“Collaborating with our law enforcement partners, we will continue to investigate and hold accountable physicians accepting payments for referrals,” Bennett said.

The Department of Defense Office of Inspector General’s Defense Criminal Investigative Service is also committed to “rooting out fraud schemes that waste taxpayer resources and impact mission readiness,” Acting Special Agent in Charge Gregory P. Shilling of the DCIS Southwest Field Office said

“DCIS will continue to work with our partners to hold those accountable who undermine the integrity of the health care system that supports our nation’s service members, retirees and their families,” Shilling said.

The United States’ amended complaint was filed in connection with a lawsuit originally filed under the qui tam or whistleblower provisions of the False Claims Act by STF LLC, whose members are Felice Gersh, M.D. and Chris Riedel, the release said.

The United States intervened in the qui tam action in December 2021 and filed a complaint under the False Claims Act in January 2022 against former THD CEO Christopher Grottenthaler, former BHD CEO Susan Hertzberg, former LRH CEO Jeffrey Madison, and others, the release said.

“Under the False Claims Act, a private party can file an action on behalf of the United States and receive a portion of the recovery,” the release said. “The Act permits the United States to intervene in such lawsuits and add claims and defendants, as it has done here.”

The qui tam case is captioned United States, et al. ex rel. STF, LLC v. True Health Diagnostics, LLC, et al., No. 4:16-cv-547 (E.D. Tex.), the release said.

“If a defendant is found liable for violating the act, the United States may recover three times the amount of its losses plus applicable penalties,” the release said.

This case is being handled by attorneys Christopher Terranova and Gavin Thole in the Civil Division’s Commercial Litigation Branch (Fraud Section) and Assistant U.S. Attorneys James Gillingham, Adrian Garcia and Betty Young in the U.S. Attorney’s Office for the Eastern District of Texas. Investigative support is being provided by HHS-OIG and DCIS.

“The United States’ pursuit of this lawsuit illustrates the government’s emphasis on combating health care fraud,” the release said. “One of the most powerful tools in this effort is the False Claims Act.”

Tips and complaints from all sources about potential fraud, waste, abuse and mismanagement can be reported to the Department of Health and Human Services, at 800 HHS TIPS (800-447-8477), according to the release.

“The claims in the complaint are allegations only, and there has been no determination of liability,” the release said.

The United States’ amended complaint alleges that, in addition to the previously named defendants, the following six physicians received kickbacks from MSOs in return for their laboratory testing referrals:

Meagan Ellsworth is the public safety, breaking news and general assignment reporter for the Beaumont Enterprise.