San Antonio oncology practice, laboratory to pay $4 million in settlement over kickback allegations

Oncology San Antonio, entered into illegal kickback arrangement with CorePath Laboratories, federal officials allege

SAN ANTONIO – A San Antonio cancer care network and a diagnostic reference laboratory have agreed to pay more than $4 million in civil settlements after federal officials uncovered an illegal kickback arrangement, the U.S. Attorney’s Office for the Western District of Texas said.

According to federal officials, Oncology San Antonio and its affiliated physicians agreed to pay $1.3 million, and CorePath Laboratories agreed to pay $2.7 million plus accrued interest to the US and the State of Texas to resolve alleged violations of the False Claims Act.

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The investigation alleges the two medical companies entered into an unlawful kickback arrangement in August 2016. CorePath Laboratories provided in-office bone marrow biopsy services at Oncology San Antonio practice locations and performed subsequent diagnostic testing on the biopsies. According to federal officials, CorePath Laboratories agreed to pay $115 for each biopsy referred by Oncology San Antonio and its physicians. The payments for each referred biopsy were paid to the private practice entities of three Oncology San Antonio physicians.

Federal officials said the payments for the biopsies referrals constituted kickbacks within the meaning of the Anti-Kickback Statute, which prohibits offering, paying, soliciting, or receiving remuneration to induce referrals of items or services covered by a federal health care program, such as Medicare, Medicaid, or TRICARE. Claims submitted in violation of the Anti-Kickback Statute may give rise to liability under the False Claims Act.

The civil settlement with Oncology San Antonio and its physicians also resolves allegations that Dr. Jayasree Rao, through Oncology San Antonio and her own oncology and hematology practice entity, provided medically unnecessary tests, services, and treatments to Medicare, TRICARE, and Texas Medicaid beneficiaries in the San Antonio Metro Area, and billed the federal healthcare programs for the medically unnecessary tests, services and treatments, federal officials said.

Rao retired from practicing medicine in March due to personal and health-related reasons, according to the Oncology San Antonio website.

“Illegal financial incentives to physicians undermine the integrity of our healthcare system and impair the objective judgment of the community’s healthcare professionals,” said U.S. Attorney Jaime Esparza. “These settlements demonstrate my office’s commitment to protect federal healthcare programs against such violations, as well as other efforts to defraud these programs.”

Oncology San Antonio released the following statement in regards to the settlement:

The physicians of Oncology San Antonio are gratified that this suit, brought almost a decade ago by a disgruntled former employee, is settled. Oncology San Antonio and its physicians cooperated in all respects with the protracted investigation, which resulted in no findings of impropriety or wrongdoing whatsoever. Our oncologists remain dedicated to providing exemplary, personalized and compassionate care to the San Antonio community.

Ultimately, Oncology San Antonio agreed to a no-fault settlement rather than a lengthy trial. We appreciate the unwavering support from our fellow community physicians, Oncology San Antonio employees, associates and patients.

About the Author

David Ibañez has been managing editor of since the website's launch in October 2000.

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