NORTH TEXAS (CBSDFW.COM) — The Department of Justice has filed suit against a North Texas dermatopathologist and his clinic, claiming they submitted more than $4 million in fraudulent claims.

A False Claims Act lawsuit has been filed against Dr. Clay Cockerell, and Cockerell Dermatopathology.

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According to allegations in a civil complaint, Cockerell knowingly permitted a laboratory management company to use his clinic’s lab license to submit false claims to federal health insurance programs, including TRICARE, for medically unnecessary tests.

(credit: Dermatology Times)

It was in March of 2015 when Cockerell allegedly signed an agreement that authorized the management company, Progen, to use his clinic’s lab license to submit claims for payment for toxicology and pharmacogenomic tests. In return, Progen agreed to pay the clinic 20% of the net revenue from those tests.

Federal prosecutors say Cockerell attempted to skirt the federal Anti-Kickback Statue by specifying that the clinic not provide any testing services to beneficiaries of federal health insurance programs, such as TRICARE, Medicare, or Medicaid, or collect any federal revenue.

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According to the complaint, Dr. Cockerell soon learned that Progen was violating their agreement and submitting claims to federal healthcare programs. He also learned that Progen was engaged in gross mismanagement and abusive practices, and even received warnings that the clinic was violating the False Claims Act.

Meanwhile, Progen marketers were offering $50 Wal-Mart gift cards to induce TRICARE beneficiaries to provide urine and saliva for expensive, medically unnecessary testing.

In June 2016, a CBS News story aired about the Wal-Mart gift card scheme. Shortly thereafter, the clinic sent a retraction letter to TRICARE and admitted receiving an additional $3.2 million for false claims. While the clinic stated that it would refund TRICARE for all of these erroneous claims, it never did.

When a federal investigation into the clinic began in 2016, Dr. Cockerell terminated his relationship with Progen. His clinic later filed an arbitration claim against Progen and its principals, seeking compensation for the millions of dollars it allegedly intended to repay to TRICARE. Progen later settled the litigation for $3.485 million. And while Cockerell and his clinic said they would use the settlement proceeds to repay TRICARE they never did.

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The government is now seeking to recover the millions in TRICARE payments that the clinic previously admitted were improper, or, at a minimum, the $3.485 million that CDP and Dr. Cockerell agreed that they would pay to TRICARE.