Drug Testing Gives Rise to Convictions and Costly Settlement in Recent Enforcement Cases

Pain management and drug abuse have received significant media attention and federal funding devoted to stopping an opioid epidemic. Health care fraud enforcement agencies are also focused on the providers who profit from unnecessary testing related to pain management and drug abuse treatment programs.

Recent health care fraud enforcement cases involving diagnostic professionals performing drug testing for Medicare beneficiaries have resulted in a multi-million dollar settlement and the conviction of two lab professionals. “It’s unconscionable that anyone would exploit this epidemic to enrich themselves on such a massive scale,” said Virginia Attorney General Mark R. Herring in a press release announcing the convictions in one fraud case.

Two Tennessee lab professionals were convicted April 7, 2016, of federal conspiracy and health care fraud charges relating to urine drug screening tests. The government alleged that Beth Palin, 49, and Joseph D. Webb, 55, who owned Bristol Labs, billed Medicare, Medicaid, TennCare and other insurers for medically unnecessary drug tests which were not used by the treating physician to determine patient care.

According to the Department of Justice, the two lab professionals worked with a physician who set up a “purported” substance abuse treatment program next door to their lab in Virginia. The physician’s program involved only medication assisted treatment, prescribing Suboxone, and required weekly drug testing for his patients, 100 percent of which the government said he referred to Bristol Labs. Insured patients were prescribed expensive drug screening tests (automated screens), which were billed to Medicare and Medicaid and other insurers, and paid nothing out of pocket, while uninsured, self-pay patients were prescribed a $25 dip-stick drug screen. The government also alleged that Palin and Webb set up their own addiction practice with a similar test ordering procedure. The government estimated the testing scheme led to more than $14 million in medically unnecessary drug tests.

“Clinical labs play a critical role in providing care for people on Medicare,” said Special Agent in Charge Nick DiGiulio, of the Office of Inspector General. “Lab professionals who aim to get rich quick by cheating patients and taxpayers, as in this case, can expect to pay a high price for their crimes.”

In another case, PremierTox 2.0, Inc. settled for $2.5 million False Claims allegations relating to urine drug screenings in Tennessee and Kentucky. The government alleged three types of conduct gave rise to false claims: 1) PremierTox (doing business in Tennessee under the name 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 two separate cases against PremierTox/Nexus brought by whistleblowers in Kentucky and Tennessee. Unlike the conviction in the Virginia case, a settlement means the allegations were not proven in court and no liability was determined.

“Medically unnecessary lab tests and financial incentives from labs to doctors in exchange for referrals are costing the taxpayers millions of dollars,” said Derrick L. Jackson, Special Agent in Charge for the Office of Inspector General in Atlanta. “This settlement is one of many that are sending a strong message to the lab industry that they need to clean up their act.”

Takeaway: Diagnostic professionals billing for drug screening tests relating to pain management and substance abuse treatment face government scrutiny