A chain of opiate addiction recovery clinics, a laboratory that performed toxicology testing for the clinics, and the two physician owners of both entities have agreed to pay the government $15.75 million to settle civil allegations of fraudulently billing Medicare and Kentucky Medicaid for unnecessary and excessive toxicology tests. The settlement agreement, announced Feb. 10 by the U.S. Attorney’s Office for the Eastern District of Kentucky, requires PremierTox to enter into a corporate integrity agreement (CIA) imposed by the Department of Health and Human Services Office of Inspector General. The CIA obligates PremierTox to institute an internal compliance program and allow a third-party review of its claims for the next five years. The settlement agreement also resolves allegations of violations of the Stark law, which prohibits referrals by a physician to an entity in which it has a financial ownership. The settlement involves SelfRefined, a chain of addition clinics; PremierTox LLC, a clinical lab that performs urine drug testing; and Bryan Wood and Robin Peavler, physician owners of both entities who allegedly violated the False Claims Act by submitting claims to the Medicare and Medicaid programs for unnecessary urine drug tests at a frequency that is unnecessary for treatment purposes. […]
A chain of opiate addiction recovery clinics, a laboratory that performed toxicology testing for the clinics, and the two physician owners of both entities have agreed to pay the government $15.75 million to settle civil allegations of fraudulently billing Medicare and Kentucky Medicaid for unnecessary and excessive toxicology tests.
The settlement agreement, announced Feb. 10 by the U.S. Attorney’s Office for the Eastern District of Kentucky, requires PremierTox to enter into a corporate integrity agreement (CIA) imposed by the Department of Health and Human Services Office of Inspector General. The CIA obligates PremierTox to institute an internal compliance program and allow a third-party review of its claims for the next five years. The settlement agreement also resolves allegations of violations of the Stark law, which prohibits referrals by a physician to an entity in which it has a financial ownership.
The settlement involves SelfRefined, a chain of addition clinics; PremierTox LLC, a clinical lab that performs urine drug testing; and Bryan Wood and Robin Peavler, physician owners of both entities who allegedly violated the False Claims Act by submitting claims to the Medicare and Medicaid programs for unnecessary urine drug tests at a frequency that is unnecessary for treatment purposes.
According to the settlement agreement, after Wood and Peavler became part owners of the laboratory, they instituted a policy that required that urine samples be automatically referred to PremierTox for additional comprehensive urine testing, including confirmation tests. Prior to the physician ownership, the addiction clinics did not automatically refer the urine samples for the extra tests.
The urine samples were frozen and held for testing at a later date because the lab did not have the equipment necessary to test the large volume of referrals it was receiving. By the time the samples were tested, many months later, they were unnecessary for patient treatment use but the lab allegedly billed them to the government programs anyway. In addition, the test were allegedly upcoded so that the fees charged were many times more expensive than other suitable alternative tests would have been.
“Billing Medicare and Medicaid for laboratory tests that are not necessary contributes to the soaring costs of health care,” said Assistant Attorney General for the Civil Division Stuart F. Delery. “Providers will be aggressively investigated and held accountable for falsely billing federal health care programs.”
Of the $15.75 million plus interest, the commonwealth of Kentucky will receive $2.74 million, which represents its share of the government’s recovery of Medicaid funds. The claims settled by the agreements in this case are allegations only and there has been no determination of liability.
Takeaway: As this case may increase government scrutiny of toxicology labs, all labs performing drug testing must ensure they have a strong and effective compliance program.
