Convictions, Sentences and a Costly Settlement in Recent Lab Test Enforcement Cases

By Kelly A. Briganti, Editorial Director, G2 Intelligence

In just this month, lab anti-kickback and false claims enforcement cases have led to the conviction of two lab professionals, prison sentences for a physician and for a lab owner, and a $2.5 million false claims settlement.

The false claims settlement involved PremierTox 2.0, Inc., which provides drug urine screening services and does business in Tennessee under the name Nexus. PremierTox settled False Claims Act allegations for $2.5 million payable to federal and state agencies. In two separate whistleblower cases, three types of conduct giving rise to false claims were alleged: 1) PremierTox/Nexus gave discounts on drug screen tests for uninsured patients in exchange for referrals of Medicare or TennCare covered patients; 2) PremierTox/Nexus submitted Medicare and TennCare claims for lab tests that were not medically reasonable and necessary; and 3) PremierTox provided Kentucky providers with free point of care testing cups for using its services. The settlement resolves the two cases but includes no admission of liability and the claims remain allegations only.

In a separate case, two Tennessee lab professionals were convicted of federal conspiracy and health care fraud charges relating to urine drug screening tests. The government alleged that the owners of Bristol Labs billed Medicare, Medicaid, TennCare and other insurers for medically unnecessary drug screen tests which were not used by the treating physician to determine patient care.

Another owner, this time of a blood diagnostic company in New Jersey, received a nine-month prison term after pleading guilty to paying for patient blood sample referrals in violation of the Anti-Kickback Statute. The owner also is subject to three years of supervised release.

Finally, yet another physician was sentenced for accepting bribes in exchange for test referrals in the Biodiagnostic Laboratory Services LLC case in New Jersey, bringing the total to 39 individuals (including 27 physicians) who have pleaded guilty in the case. The Department of Justice press release announcing the sentence indicates this case is “believed to be the largest number of medical professionals ever prosecuted in a bribery case.”

“Lab professionals who aim to get rich quick by cheating patients and taxpayers … can expect to pay a high price for their crimes,” Special Agent in Charge Nick DiGiulio, of the Office of Inspector General, said in the announcement of the conviction of the Bristol Lab owners, accurately summing up the enforcement climate in the laboratory sector.