Michigan Reference Lab Settles False Billing Charges for $1.2 Million Case: The OIG claimed that Michigan reference lab Great Lakes Medical Laboratory, Inc. ripped off Medicare and United Mine Workers Association (UMWA) health plans by billing for routine urine and blood tests that were already reimbursed for other lab services over a roughly 18-month period. In some cases, the lab billed tests for West Virginia workers that weren’t ordered by a physician or even actually performed. Rather than risk a trial, the lab agreed to settle the charges for $1,200,737.64, exactly twice the actual $600,368.82 that Medicare and the UMWA paid for the false claims. In addition to the double penalty, the lab in this case had to enter into a three-year Integrity Agreement requiring it to, among other things, implement a compliance program under the OIG’s review and hire an Independent Review Organization to review its Medicare and UMWA claims. Significant: Reference labs hired by Medicare providers to perform contracted tests have become a popular target for federal false billing enforcement activity, particularly in drug testing. Earlier this year, a reference lab and pain clinic in Tampa and the executive that ran them had to pay $41 million to […]
Michigan Reference Lab Settles False Billing Charges for $1.2 Million
Case: The OIG claimed that Michigan reference lab Great Lakes Medical Laboratory, Inc. ripped off Medicare and United Mine Workers Association (UMWA) health plans by billing for routine urine and blood tests that were already reimbursed for other lab services over a roughly 18-month period. In some cases, the lab billed tests for West Virginia workers that weren’t ordered by a physician or even actually performed. Rather than risk a trial, the lab agreed to settle the charges for $1,200,737.64, exactly twice the actual $600,368.82 that Medicare and the UMWA paid for the false claims. In addition to the double penalty, the lab in this case had to enter into a three-year Integrity Agreement requiring it to, among other things, implement a compliance program under the OIG’s review and hire an Independent Review Organization to review its Medicare and UMWA claims.
Significant: Reference labs hired by Medicare providers to perform contracted tests have become a popular target for federal false billing enforcement activity, particularly in drug testing. Earlier this year, a reference lab and pain clinic in Tampa and the executive that ran them had to pay $41 million to settle charges of billing Medicare for unnecessary urine drug tests.
Out-of-Network Drug Testing Labs Can Sue UnitedHealthcare for Inadequate Reimbursement
Case: A group of out of network labs and substance abuse clinics sued UnitedHealthcare for reimbursing them only 19.5% of covered charges on 1,306 insureds that had already met their annual out-of-pocket maximum even though plan documents and federal law required payment at 100%. UnitedHealthcare contended the labs’ claims weren’t legally valid and asked the California federal court to dismiss them without a trial. The court rendered a mixed decision, upholding some of the claims while tossing others.
Significance: Claims about the terms of the actual health plans under the federal Employee Retirement Income Security Act (ERISA) failed because they were based on state insurance laws which ERISA preempts, i.e., supersedes. However, the court went on to find that the labs had valid non-ERISA breach of contract claims and would get the chance to prove them at trial. The breach of good faith and fair dealing claims also ended up on the cutting room floor because they were largely duplicative of the contract claims, the court reasoned [In re Out of Network Substance Use Disorder Claims Against UnitedHealthcare, 2020 U.S. Dist. LEXIS 153773].
Specimen Collection Fee Scam Costs San Diego Lab $3+ Million
Case: Phamatech, Inc. and its CEO and founder agreed to pay $3.034 million to settle charges of falsely billing Medicare for drug testing services. The feds claim that the San Diego-based lab and diagnostic device manufacturer paid a to medical practice group kickbacks in the form of specimen collection fees in exchange for referrals of Medicare patients for urine drug tests. By subsequently billing Medicare for those tests, the lab crossed over into the realm of False Claims Act violation.
Significance: Paying referring physicians specimen processing fees remains a highly risky proposition for labs regardless of how those fee arrangements are structured. The clearest example of this is the HDL and Singulex, Inc. case involving whistleblower allegations of paying physicians processing fees of $10 to $17 per test exchange for orders of medically unnecessary blood tests, which were subsequently billed to Medicare and TRICARE. And the risk flows in both directions. Thus, for example, earlier this year, a pair of Colorado physicians and their family medical practice had to fork over $55,000 for accepting those fees from HDL and Singulex.
Pennsylvania Medical Assistants Confess to Participating in Genetic Test Fraud Scheme
Case: Federal and state enforcers are closing in on a Pennsylvania primary care physician who allegedly ripped off Medicare for genetic tests to the tune of $755,241. At the center of the scheme is Yitzachok “Barry” Kurtzer and his wife, Robin, who accepted monthly cash kickbacks of up to $5,000 in exchange for collecting DNA samples from Medicare patients and sending them for genetic tests to clinical labs in New Jersey and Pennsylvania. The Kurtzers were able to keep the scheme going even when the COVID-19 pandemic substantially reduced in-patient visits by accepting payments via wire and mobile phone money-transfer apps.
Significance: Prosecutors appear to be building a strong case against the Kurtzer. Three persons have stepped forward and admitted their role in the scheme, including two medical assistants and and an employee who helped collect the DNA swabs.
