NORTH LITTLE ROCK, Ark. – June 17, 2026 – Advanced Pathology Solutions PLLC, an anatomic pathology laboratory based in North Little Rock, along with its management services organization and current and former owners, have agreed to pay $30 million to resolve allegations that they furnished unlawful kickbacks and ordered medically unnecessary pathology testing services, the U.S. Department of Justice announced Wednesday.

The settlement resolves allegations made by the United States in a complaint filed on April 8 in the U.S. District Court for the Eastern District of Arkansas. The defendants include Advanced Pathology Solutions PLLC (formerly known as Advanced Pathology Solutions LLC), APS MSO LLC, and current and former owners Kevin Hannah, Donell Burkett, and Daniel Hunter Pledger.

According to the government’s complaint, from 2015 through July 2022, APS and its owners violated the False Claims Act by providing unlawful kickbacks to gastroenterology practices to induce the referral of pathology testing to APS, resulting in false claims to federal healthcare programs.

A Business Model Built on Kickbacks

The government’s complaint focused on a business model developed by APS and its owners, in which APS set up and managed limited-purpose laboratories—known as “lean labs”—in gastroenterology practices nationwide. These labs enabled the practices to bill for preparing and staining biopsy specimen slides. In exchange for various benefits furnished by APS, the gastroenterology practices agreed to exclusively refer their patients to APS by shipping their patients’ slides to the company’s lab in North Little Rock for pathologist interpretation and review.

The United States alleged that the arrangements between APS and the gastroenterology practices were improper financial relationships through which APS provided kickbacks to induce the practices to steer their patients to APS.

Medically Unnecessary Testing Allegations

The government further alleged that APS and its owners submitted and caused the submission of claims to federal healthcare programs for unnecessary testing. Specifically, APS directed lean lab personnel to automatically order certain special tests—called “special stains”—before a pathologist reviewed a routine test to determine whether additional testing was necessary. By following this protocol, APS and the lean labs ordered special stains that were not medically reasonable and necessary and were ineligible for Medicare coverage or reimbursement. In many cases, APS would also order additional “confirmatory” immunohistochemical testing on patient samples, which was also not medically necessary.

Additional Kickback Scheme Uncovered

The settlement also resolves allegations that from November 1, 2018, to November 30, 2020, APS and CEO Kevin Hannah knowingly and willfully provided unlawful kickbacks to an individual named Richard Sorgnard in the form of volume-based commission payments to induce the referral of patients to APS for epidermal nerve fiber density testing. Sorgnard, who previously entered into a settlement with the government to resolve related claims, encouraged medical providers and practices to order ENFD testing from APS for their patients. In exchange, APS paid Sorgnard 4% of all payments APS collected for ENFD testing referred. The United States contends that this arrangement violated the Anti-Kickback Statute and resulted in false claims under the False Claims Act.

Government Officials Condemn Fraudulent Conduct

“Healthcare referrals must be based on the best decision for patients, not the influence of kickbacks,” said Assistant Attorney General Brett A. Shumate of the Justice Department’s Civil Division. “This settlement demonstrates the Department’s commitment to hold accountable both corporations and individuals who profit from improper kickback arrangements and who burden federal healthcare programs with claims for medically unnecessary services.”

U.S. Attorney Jonathan D. Ross for the Eastern District of Arkansas emphasized the significance of the settlement. “Fraud against the taxpayer is rampant and insidious and when discovered must be held accountable. Engineering kickbacks to result in unnecessary medical testing which is then paid for by the United States taxpayer is unacceptable,” Ross said. “Our office will continue to work with Main Justice to detect and deter any similar schemes and then hold the wrongdoers accountable under the law.”

U.S. Attorney Troy Rivetti for the Western District of Pennsylvania added, “Any entity that participates in health care and reaps illicit profits by taking advantage of and violating the trust given by Medicare and Medicaid programs must be held accountable. This settlement is notice that such illegal conduct simply will not be tolerated.”

Acting Deputy Inspector General for Investigations Scott J. Lampert of the U.S. Department of Health and Human Services Office of Inspector General underscored the broader impact of such schemes. “Kickbacks and medically unnecessary testing don’t just violate the law — they endanger patients and drain critical federal health care funds,” Lampert said. “Schemes like this erode trust in the health care system and divert resources away from those who truly need care. HHS‑OIG will move swiftly and aggressively with our law enforcement partners to uncover these abuses and hold every responsible party accountable.”

Corporate Integrity Agreement and Whistleblower Lawsuits

In connection with the settlement, APS entered into a five-year Corporate Integrity Agreement with the HHS Office of Inspector General. The agreement requires APS to implement numerous auditing and accountability provisions, including implementation of a robust compliance program, new training and education requirements, and a review of physician referral relationships.

The complaint follows three lawsuits that were originally filed under the qui tam, or whistleblower, provisions of the False Claims Act. Under the FCA, private parties can file an action on behalf of the United States and receive a portion of the recovery. The FCA permits the United States to intervene in and take over the action, as it has done in this case. If a defendant is found liable for violating the FCA, the United States may recover three times the amount of its losses plus applicable penalties.

The settlement follows a $4.75 million settlement reached earlier this year with Atlanta Gastroenterology Associates, a gastroenterology practice and former client of APS.

The claims resolved by the settlement are allegations only, and there has been no determination of liability.

The CEO of APS, Kevin Hannah, said in a press release responding to the settlement, “This resolution brings closure to a process that has spanned several years and allows us to remain focused on supporting physicians, serving patients, and advancing our laboratory services,” said Kevin Hannah, CEO of APS. “We appreciate the opportunity to move forward and continue delivering high-quality pathology services while maintaining a strong commitment to compliance and regulatory excellence.”

He added,”We are proud of the compliance-focused organization we have built and the improvements we have made throughout this process,’ Hannah said. ‘Our team is excited to turn the page and focus on the future.”