Clinical Labs and Owner Charged in Alleged $2 Million UDT Scheme

Three labs, their owner, two lab marketing companies, a fourth lab, and a physician are accused of kickbacks, money laundering, and fraud.

In one key lab-related enforcement action announced last week, four clinical labs and associated companies and individuals were charged for their roles in a fraud scheme involving billing over $2 million for unnecessary urine drug tests (UDTs) to the state of Massachusetts as well as kickbacks and money laundering.

Three of the labs—Alpha Labs, LLC, Aria Diagnostics, LLC, and Preferred Laboratory LLC and their owner were charged with Medicaid false claims; larceny over $1,200; kickbacks, bribery, or rebates; and conspiracy. The labs and owner are all alleged to have submitted claims to MassHealth and MassHealth managed care entities for urine drug testing, according to a June 7 statement from the Office of Massachusetts Attorney General Maura Healey.

According to the AG office, the owner and three labs paid kickbacks to two clinical lab marketing companies—Summit Diagnostics and OSA Exports—in exchange for boosting the number of UDTs referred to the labs. Those marketing companies also face charges related to the case. In addition, the three labs and owner had another kickback scheme going with a fourth lab, Lab USA, in which that lab was given a percentage of collected insurance reimbursements in exchange for referring urine samples to the other three labs for testing, the AG’s office alleges. Lab USA also faces charges relating to that kickback scheme.

And, that’s not all. In addition to the other charges, Alpha Labs, LLC, Aria Diagnostics, LLC, and Preferred Laboratory LLC and their owner, are also accused of submitting improper claims to MassHealth. Lastly, a Massachusetts physician also faces charges related to the scheme.¹

In other key healthcare-related cases announced last week:

June 8: The owner and chief executive officer of Chicago home health care company Home Physician Services LLC was sentenced to a year in prison for a $1.2 million fraudulent billing scheme in which he billed Medicare for services that were either far less extensive than listed in the claims, or weren’t provided at all, the U.S. Department of Justice (DOJ) said in a statement.²

June 9: A large shareholder of California-based medtech company Arrayit pleaded guilty for his role in a scheme to defraud investors by using misleading information to encourage people to buy Arrayit securities and thus artificially drive up the stock’s price, according to the DOJ.³

June 10: Healthcare networker Steward Health Care System LLC and a number of related entities agreed to pay $4.735 million to settle False Claims Act allegations. According to the DOJ, the company allegedly engaged in separate relationships with Brockton Urology Clinic and a physician practice in which it paid those entities for prostate cancer-related programs that were never provided. Steward was also allegedly involved in two other sets of physician relationships in which physicians or physicians’ groups were paid for services, but no proof was found of those services actually having been provided. In addition to the payment, Steward has also entered into a five-year corporate integrity agreement with the U.S. Department of Health and Human Services Office of Inspector General.⁴

Clinical Labs and Owner Charged in Alleged $2 Million UDT Scheme

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