Court Refuses to Dismiss EKRA Charges against Former Arrayit CEO

Case: A case that could be described as “Theranos Lite” is the prosecution against Mark Schena, former president of Arrayit Corporation, a self-described “world leader in microarray technology empowering researchers and doctors in the life sciences, wellness, and health care testing markets.” In addition to defrauding shareholders, the government has accused Schena of conspiracy to pay kickbacks and bribes to doctors and marketing companies for patient blood samples and orders for allergy testing in violation of the Eliminating Kickbacks in Recovery Act (EKRA). Schena’s lawyers claimed that EKRA doesn’t even cover the alleged conduct and asked the California federal court to dismiss the charges. The court refused [United States v. Schena, 2022 U.S. Dist. LEXIS 96051].

Significance: EKRA is a controversial and confusing law that basically broadens and extends bans on offering, paying, or receiving kickbacks for lab testing and other health care services that are billed to not only government but also private payors. The law bans marketing practices that may be permitted under current Anti-Kickback Statute safe harbors and Stark Law exceptions. The court in this case rejected Schena’s argument that EKRA bans on marketing apply only to marketers’ efforts to recruit patients directly, rather than efforts to recruit them indirectly via physician relationships.

Pennsylvania Pain Clinic Owner Pays $900K to Settle Drug Test False Billing Charges

Case: The feds contend that a group of Pain Medicine of York clinics controlled by Rodney L. Yentzer billed Medicare for medically unnecessary urine drug tests (UDTs) between 2017 and 2019. The $900,000 settlement resolves civil charges involving the scheme. Yentzer has already pled guilty to money laundering and healthcare fraud and is now awaiting sentencing. He’s also agreed to an exclusion from all federal healthcare programs for 22 years.

Significance: This is the latest in a series of cases against labs for false billing of UDTs. As in many of the previous cases, the clinics were accused of false claims for presumptive and definitive UDTs. The latter test, which is more expensive, is medically necessary only when the presumptive test results dictate. Routinely billing for the definitive test as a matter of course without consideration of the presumptive test results thus results in care that’s not medically necessary.

Massachusetts Health System Settles False Billing Charges for $4.7 Million

Case: Steward Health Care System, one of the nation’s largest, private for-profit health care networks has agreed to shell out $4.735 million, 17 percent of which will go to the whistleblowers who filed the original complaint, to settle claims of violating the False Claims Act by paying physicians for services they didn’t provide. According to the complaint, Steward Good Samaritan Medical Center, Inc. (GSMC), a for-profit hospital owned by Steward in Brockton, MA, hired Brockton Urology Clinic to administer its Prostate Cancer Center of Excellence. The problem is that Brockton Urology didn’t provide the services. In fact, GSMC didn’t actually have a Prostate Cancer Center of Excellence. The payments Brockton Urology received from GSMC between April 2011 and December 2017 were actually compensation for patient referrals.

Significance: Under the settlement agreement, Steward accepted responsibility for three actions:

• Failing to charge referring physicians “proper rent” on office leases in possible violation of the Anti-Kickback Statute
• GSMC’s entering into a compensation arrangement with an internist for services that Steward couldn’t confirm were ever actually performed
• GSMC’s entering into arrangements with local urology centers for services not provided.

In addition to the $4.7 million settlement payment from Steward, GSMC has agreed to enter into a five-year corporate integrity agreement with the U.S. Department of Health and Human Services Office of Inspector General (OIG).

Quest Gets Restraining Order Against Lab Supervisor that Stole Confidential Information

Case: Quest’s Data Protection Department discovered that a lab supervisor tried to use his work server to send an email containing confidential lab information to his personal email address. The resulting investigation unearthed more violations, including downloading of a cloud storage program on the supervisor’s work computer. Quest terminated and sued the supervisor for breach of contract, misappropriation of trade secrets, and other claims. Rather than risk waiting for the trial to end, Quest asked the court for a restraining order requiring the supervisor to make a full accounting, under oath, of and return all Quest confidential information he took and allow a third-party IT vendor to access his personal accounts and delete any confidential information it found. The Nevada federal court issued the restraining order [Quest Diagnostics Inc. v. Elarja, 2022 U.S. Dist. LEXIS 105813].

Significance: Courts are normally reluctant to grant temporary restraining orders or injunctions, but Quest was able to meet the high standard for so called equitable relief by showing that:

• It was likely to win the underlying lawsuit
• It would suffer irreparable harm if the order wasn’t granted
• The balance of equities and public interest weighed in favor of granting the order
• It would post whatever bond the judge deemed appropriate.