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Judge Sides With AIDS Healthcare Foundation, Dismisses Suit


A federal judge ruled in favor of one of the nation's largest suppliers of HIV and AIDS medical care, clearing it of wrongdoing in an alleged $20 million scam to bilk the federal government.

Three former managers of the AIDS Healthcare Foundation filed a federal lawsuit in South Florida in 2014 alleging the company paid employees and patients kickbacks for patient referrals to boost funding from federal health programs. Employees were paid $100 for referring patients with positive test results to its clinics and pharmacies.

U.S. District Judge Kathleen M. Williams ruled in a decision unsealed this week that bonus payments were not subject to a 1972 law aimed at stopping unethical referrals because they fall under the statute's employee safe harbor provision.

The lawsuit claimed the kickbacks started in 2010 at the company's California headquarters and spread to programs in Florida and several other locations.

An attorney for the plaintiffs, Theodore Leopold, said in an email Friday that "we respect the ruling by the court but look forward to the appeal."

The organization's president, Michael Weinstein, has vigorously denied any wrongdoing, saying when the lawsuit was filed that the small financial incentives for linking people to services and keeping them there are "mainstays of public health interventions."

He said the proactive approach is critical to stopping HIV in the U.S. and to providing lifesaving care.

The Los Angeles-based company cares for more than 400,000 patients in 36 countries and is leading a mass testing initiative to identify and treat an estimated 25 million people who don't know they are infected, according to its website.