Lab Settlements Resolve False Claims Cases

Several recent settlements demonstrate vigorous continuing government enforcement of the False Claims Act against providers. The following cases highlight three top compliance issues of current concern to laboratories: the 60-day deadline to repay overpayments, medical necessity, and appropriateness of drug testing.

Continuum Settles Reverse False Claims
Case: Facing the uncertainty of trial, Continuum has officially settled reverse false claims allegations for $2.95 million. The government had claimed the company failed to comply with the 60-day deadline to repay Medicaid overpayments. In September 2015, a New York federal court denied Continuum's request to toss out the case without a trial. A software glitch had caused Continuum to submit roughly 450 erroneous claims to Medicaid between 2009 and 2010 resulting in $800,000 worth of overpayments. Continuum paid the money back but not within 60 days of first learning of the potential overpayment and not in one lump sum but rather via 30 installments made over the course of two years. The government had claimed that delay was deliberate and brought the "reverse false claims act" action against Continuum.

Significance: Continuum is a landmark case because it was the first federal enforcement action against a provider for failing to meet the Affordable Care Act requirement that overpayments be repaid in full within 60 days of identifying the overpayment. And the case was launched before the CMS issued guidance to help providers comply. Although it came too late for Continuum, the CMS finally laid down some guidelines in February 2016. Bottom Line: According to the Final Rule, providers must exercise what CMS calls "reasonable diligence" in identifying, calculating and repaying overpayments.

Editor's Note: For a list of six specific things you should do to meet reasonable diligence criteria, see "Avoid False Claims Liability: CMS Clarifies How to Comply with 60-Day Deadline for Returning Overpayments," G2 Compliance Advisor, April 2016, pp 5-8.)

[U.S. v. Continuum Health Partners, Inc., 11 Civ. 2325 (ER), USDC (S.D.N.Y.), August 23, 2016].

Questions on Medical Necessity of Drug Testing Lead to $7.4 Million Settlement
Case: Quantitative drug tests that count illicit drug particles in urine are rarer and more expensive than qualitative tests that simply detect the drug's presence. So when data analytics showed that a Florida pain clinic was a statistical outlier for Medicare billing of quantitative tests, federal investigators swooped in. The DOJ filed False Claims Act charges, claiming the clinic did quantitative tests on elderly patients routinely, regardless of medical necessity, even when patients' qualitative tests came back negative. Rather than slug it out in court, the clinic settled the case for $7.4 million [Physicians Group Services, P.A., dba Coastal Spine and Pain, USAO, M.D. Fla., Aug. 31, 2016].

Significance: Coastal is the latest in a series of enforcement actions for false billing of medically unnecessary urine drug screening tests:

• On Aug. 18, two former lab professionals convicted at trial of such charges were sentenced to 36 months in prison and ordered to pay $1.437 million in restitution; and

• Similar charges were among the allegations of a pair of whistleblowers settled by PremierTox 2.0, Inc. for $2.5 million in April.

[See, Drug Testing Gives Rise to Convictions and Costly Settlement in Recent Enforcement Cases, NIR, April 18, 2016]

Settlement Resolves Claims of Medically Unnecessary FISH Testing
Case: A Florida urologist agreed to pay $250,000 to settle claims of falsely billing Medicare and Tricare for medically unnecessary fluorescence in situ hybridization, aka, FISH tests, which are performed on urine to detect genetic abnormalities tied to bladder cancer. The case, which began as a former medical assistant's whistleblower suit, also alleged that the urologist received bonuses based on the number of FISH tests he ordered [Robert A. Scappa, USAO, M.D. Fla., Aug. 17, 2016].

Significance: FISH tests conducted by a urologist are deemed medically reasonable and necessary for Medicare coverage purposes in only two limited situations:

• To monitor for tumor recurrence in patients previously diagnosed with bladder cancer; or

• Where after a full workup of a patient with hematuria, i.e., blood in the urine, the urologist has reason to suspect bladder cancer.

Takeaway: Medical necessity and drug testing continue to be hot enforcement topics for laboratories and the 60-day rule regarding repayment of overpayment yields major settlement.