Tax raids expose nexus between labs, doctors

Tax raids expose nexus between labs, doctors

Income-tax raids on diagnostic centres and fertility clinics have unearthed a racket in which doctors pocket huge commissions.

The raids in Bengaluru, spread over three days and culminating on Saturday, exposed doctors getting kickbacks of up to 35% on MRI scans, and at least 20% on other laboratory tests.

The sleuths raided two IVF (in vitro-fertilisation) centres run by a prominent woman doctor and five diagnostic centres.

The labs searched have declared previously undisclosed income of about Rs 100 crore, the department said.

Huge kickback

"The amount of referral fee in the case of a single lab exceeds Rs 200 crore,'' an official release said.

The Income Tax department seized Rs 1.4 crore in cash and gold and jewellery weighing 3.5 kg.

The sleuths also found foreign currency and details of foreign bank accounts, with "deposits running into crores of rupees."

How it works

The searches have established how doctors get paid for prescribing diagnostic tests.

"The commission varied from lab to lab but the median range of normal 'cuts' for doctors is 35% in case of MRI tests and 20% in case of CT scan and other lab tests,'' the release said. The payments are disguised as marketing expenses.

As part of a deal, doctors are described as in-house consultants, but they neither visit diagnostic centres to see patients nor write reports, the statement said. In some cases, commissions are paid to doctors by cheque under revenue sharing agreements.

Commission agents

Some labs employ commission agents whose job is to hand out money to doctors. For each doctor, the agents insert a small chit in an envelope with cash, giving details of patients referred, tests done, amounts billed, and commission due.

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