Signal Diagnostics to Pay $20.5 Million Over Unreturned COVID-19 Overpayments

Key Takeaways

• $20.5 Million False Claims Act Settlement: Signal Diagnostics agreed to pay $20.5 million to resolve allegations that it knowingly avoided repaying federal funds it received for ineligible COVID-19 claims.
• Internal Audit Found Insured Patients: Signal’s own audit identified claims submitted to the HRSA Uninsured Program for individuals who actually had health insurance.
• Repayment Is at the Heart of the Case: The government alleges Signal calculated the overpayments but knowingly and improperly avoided its obligation to return them.
• Nearly $8 Million Had Already Been Refunded: Signal received credit for approximately $7.96 million in previous refund payments, leaving about $12.64 million plus applicable interest under the settlement.

Deep Dive

Signal Diagnostics found the problem itself. In January 2022, the clinical laboratory began an internal audit of claims it had submitted to a federal program that reimbursed healthcare providers for treating and testing uninsured patients during the COVID-19 pandemic. What the company found was not trivial. Some of the people it had billed as uninsured had health insurance.

The audit continued for more than a year. Signal identified the affected claims and calculated how much it had received in overpayments. What happened after that is now the basis of a $20.5 million False Claims Act settlement with the federal government.

The Justice Department alleges that Signal knowingly and improperly avoided its obligation to return those overpayments to the Health Resources and Services Administration, which administered the COVID-19 Uninsured Program. The case is less about how an incorrect claim gets submitted than about what a company is expected to do once it knows the money should not be sitting in its account.

“When companies knowingly retain federal healthcare program funds they were not entitled to receive, they violate the public’s trust and the law,” Assistant Attorney General Brett A. Shumate of the Justice Department’s Civil Division said in announcing the settlement.

The Uninsured Program operated during the pandemic to reimburse eligible providers for COVID-19 testing, testing-related services, treatment and vaccine administration provided to people without health insurance. Signal performed COVID-19 testing at public testing sites and client locations.

Between October 2020 and March 2022, the company submitted claims to the program for testing services and specimen collection. Then came the internal audit.

According to the government, Signal discovered several reasons insured patients had ended up in a program intended for the uninsured. Its internal system had sometimes created multiple profiles for the same person, leaving conflicting insurance information in its records. In other instances, claims were submitted to the Uninsured Program even though alternative insurance information was already on file.

Signal continued its audit from January 2022 until May 2023 and calculated the overpayments it had received for ineligible claims. The government alleges that during that period the company knowingly and improperly avoided repaying HRSA. That is the conduct the False Claims Act settlement resolves.

What Signal Will Pay

The settlement agreement sets the amount at $20,594,640.13, of which $10,297,320.06 is designated as restitution. Interest accrues at an annual rate of 4.375% from April 24, 2026. There is an important wrinkle in the headline figure. Signal had already made $7,956,936.89 in refund payments to the government. Under the agreement, those payments are credited against the settlement amount, leaving $12,637,703.24, plus applicable interest, to be paid under the settlement.

The agreement also prevents Signal from seeking payment for the covered healthcare billings from patients, their families, responsible parties or third-party payors. Certain costs associated with the investigation, settlement and corrective actions cannot be charged to federal healthcare programs or included in government contract costs.

The significance for compliance officers lies in the chronology. The government is not merely alleging that Signal submitted claims containing errors. Its case rests on the period after Signal's own review had begun uncovering them. The company had an audit underway. It had identified insured patients whose claims had been sent to the Uninsured Program. It was calculating the resulting overpayments. The government's allegation is that Signal nevertheless avoided its obligation to give that money back.

“Providers who receive federal program funds must meet their legal obligation to return money they are not entitled to,” Acting Deputy Inspector General for Investigations Miranda L. Bennett of the Department of Health and Human Services Office of Inspector General said. She said Signal's alleged avoidance of repayment undermined the integrity of a program created to support uninsured patients during the public health emergency.

The Justice Department's Civil Division, Commercial Litigation Branch, Fraud Section handled the matter with assistance from HHS-OIG. The settlement resolves civil allegations rather than a finding of wrongdoing. Signal did not admit liability under the agreement, and the Justice Department said the claims resolved by the settlement remain allegations for which there has been no determination of liability.

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