Labs In Court: A roundup of recent cases and enforcement actions involving the diagnostics industry

Continuum Waves White Flag on Medicaid Overpayments Delay Case
Case: A software glitch caused Continuum to submit roughly 450 erroneous claims to Medicaid between 2009 and 2010 resulting in $800,000 worth of overpayments. Continuum paid back all the money. But instead of paying a lump sum within the 60-day repayment deadline, Continuum paid it back in dribs and drabs via 30 installments made over the course of two years. The government claimed the delay was deliberate and brought a "reverse false claims act" action against Continuum. In September 2015, a New York federal court denied Continuum's request to toss out the case without a trial. Facing an uncertain trial, Continuum has officially settled the case for $2.95 million [U.S. v. Continuum Health Partners, Inc., 11 Civ. 2325 (ER), USDC (S.D.N.Y.), August 23, 2016].

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. (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," GCA, April 2016.)

Coastal Pays $7.4 Million to Settle Charges of False Billing for Drug Tests
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:

• Two lab 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 Enforcement Cases Lead to Costly Settlements and Convictions, GCA, May 2016]

DOJ Nets $250K from Urologist in FISH Testing Settlement
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.