Lessons from the $9.6 Million Settlement Against an Indianapolis Diagnostic Lab
Whistleblowers play a critical role in protecting taxpayers, safeguarding federal health programs, and exposing fraud that would otherwise remain hidden. These individuals — often employees, contractors, or insiders — speak up when they witness wrongdoing such as improper billing, kickbacks, falsified data, or other schemes affecting government-funded programs.
Under the federal False Claims Act (FCA), whistleblowers can file what are known as qui tam lawsuits, enabling them to work with the government to expose fraud and, in many cases, share in any financial recovery.
A recent federal settlement involving an Indianapolis diagnostic laboratory highlights why whistleblowers are essential, and how quickly fraudulent schemes can harm taxpayers and vulnerable patients.
Indianapolis Lab Agrees to Pay $9.62 Million in Medicare Fraud Settlement
On November 24, 2025, the U.S. Department of Justice announced that Patients Choice Laboratories (PCL) agreed to pay $9.62 million to resolve allegations that it submitted improper Medicare claims and used kickbacks to increase testing volume. The case was investigated by U.S. attorney offices in Indiana and Maryland, the DOJ Civil Division, the FBI, and the Department of Health and Human Services Office of Inspector General.
Federal prosecutors allege that:
- PCL billed Medicare for costly respiratory pathogen panels that were medically unnecessary or tied to improper referral arrangements. The company allegedly paid commissions to independent sales representatives based on the amount of testing they generated.
- A 2020 “marketing agreement” with an infection-prevention company, $5,000 per month for supposed services, was actually a pretext for referral payments.
- That company collected COVID-19 swabs from long-term-care residents, after which PCL allegedly ran additional respiratory panels, often without medical necessity and, in some cases, without performing the COVID-19 test at all.
- Between 2020 and 2022, the partner company received nearly $1.86 million in referral payments, while PCL collected more than $6 million in Medicare reimbursements tied to the scheme across 43 long-term-care facilities nationwide.
“These arrangements drove unnecessary testing and undermined safeguards meant to prevent fraud,” federal prosecutors stated.
As with most False Claims Act settlements, the agreement resolves allegations; no liability has been legally determined. Still, cases like this are a powerful reminder that whistleblowers are often the first, and sometimes only, people with enough insight to recognize that something is wrong.
What Is a Qui Tam Lawsuit?
A qui tam action is a lawsuit brought by a whistleblower(called a “relator”) on behalf of the federal government. Under the False Claims Act, individuals can report fraud involving government funds, including:
- Medicare or Medicaid fraud
- Kickbacks to generate referrals
- Manipulated or inflated billing
- Unnecessary medical testing
- False certifications or falsified documentation
- Government contractor fraud
- Misuse of federal grants or funds
Whistleblowers can bring information to the government confidentially, and if the case results in a settlement or judgment, the relator may be eligible to receive a percentage of the recovery, often between 15%-30%.
The process is complex, highly specialized, and requires confidentiality and legal precision.
Whistleblowers Make The Difference
Whistleblowers are uniquely positioned to help correct injustices and reinforce accountability in industries where oversight is often limited.
Cases like the Patients Choice Laboratories settlement illustrate how fraud schemes can harm multiple groups at once, including:
- Patients, who may be subjected to unnecessary or inappropriate medical services.
- Taxpayers, who bear the financial burden of fraudulent claims.
- Honest providers, whose compliance efforts are undermined by competitors willing to break the rules
With just cause, however, many whistleblowers fear retaliation or career consequences for exposing these significant instances of fraud.
CohenMalad, LLP Represents Whistleblowers Nationwide
At CohenMalad, LLP, our attorneys have decades of experience handling complex whistleblower and qui tam litigation in matters involving healthcare fraud, financial misconduct, and government-fund misuse. Our attorneys understand the courage it takes to come forward, and we work confidentially, strategically, and aggressively to protect whistleblowers and pursue justice.
If you have information about fraudulent billing, improper Medicare claims, kickbacks, government-contractor fraud, or similar conduct, speaking with an attorney is an important first step. Even if you are unsurewhether what you witnessed qualifies as fraud, our team can help evaluate your situation and explain your options.
Contact CohenMalad, LLP for a Confidential Consultation
If you have knowledge of a fraud scheme similar to the allegations in the Patients Choice Laboratories case, or any conduct involving misuse of government funds, you may have rights under the False Claims Act.
We offer confidential consultations and can advise you on whether a qui tam action may be appropriate.
To speak with an experienced whistleblower attorney, contact CohenMalad, LLP today.
To speak with an experienced whistleblower lawyer, contact CohenMalad, LLP today.
Scott Gilchrist focuses his practice on complex and class action matters in various industries and areas of the law. Mr. Gilchrist has represented individual, corporate and municipal clients in state and federal trial and appellate courts around the country. He has served as counsel in dozens of class actions involving antitrust, government overreaching, landowner rights, consumer protection, banking and insurance practices, securities fraud, telecommunications charges, and product defects.