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

Doctor Pleads Guilty for Ordering Unnecessary Tests of Opioid Patients
Case: A 72-year-old Detroit area physician pleaded guilty for his role in a $19 million Medicare fraud scheme. In addition to prescribing medically unnecessary oxycodon and other controlled substances to Medicare patients who did not need them, the physician admitted to requiring his patients, many of whom were drug addicts, to undergo testing at labs in which he had secret ownership interests.

Significance: Labs involved in opioid drug testing need to be on high alert. This summer, the Department of Justice unleashed a potent nationwide crackdown on opioid drug abuse. And while labs and physicians are not the primary target, they continue to get caught up in the dragnet. Recent examples include genetic testing company Proove Biosciences whose Southern California HQ was raided by the FBI in a Takedown case targeting illegal dispensing of oxycodone and opioids by Physicians Primary Care (PPC) in Indiana, and urinalysis lab Confirmatrix, which was allegedly involved in a Tennessee opiate pill mill scheme. (See "Labs In Court," NIR, Sept. 26, 2017).

OIG Claims Point of Care Test Cup Freebies Cross the Kickback Line
Case: Nearly two years after official settlement, the massive Millennium Laboratories case continues to smolder. The latest collateral defendant is Parallax Center, a New York City drug addiction treatment center which has agreed to settle kickback-related charges with the OIG for $64,203.

Significance: For lab managers, the takeaway from this case is what Parallax provided to Millennium, namely, point of care test cups. The moral is that compensation does not have to be elaborate to establish an illegal referral relationship. And because the referrals were invalid, billing for the resulting claims amounted to false billing.

Kickback, Custom Panel & Standing Order Claims Settled for $2 Million
Case: A South Carolina family medical clinic and its CEO agreed to settle false claims charges for $2 million, $340,510 of which will go to the physician who brought the original whistleblower lawsuit. The controversy centered on the clinic's compensation arrangement that allegedly encouraged physicians to refer Medicare patients to clinic labs. Referring physicians that went along got a percentage of the reimbursement amount while physicians who referred patients to other labs had their compensation cut.

Significance: The government also claimed that the clinic created and pressured physicians to order custom thyroid, hepatic and other disease panels bloated with medically unnecessary lipid tests not typically used for screening or routine testing. Adding fuel to the fire, the clinic created lab standing orders that required staff to automatically perform certain diagnostic tests in response to indications regardless of whether those tests were actually ordered by a physician.

Clinic Owner Jailed, Ordered to Repay $1.1+ Million in Unnecessary Services
Case: The owner-operator of a Burbank medical clinic was sentenced to 37 months in prison after pleading guilty to two counts of falsely billing Medicare for medically unnecessary office visits and diagnostic tests. The owner admitted that "many, if not all" of the people who came to her clinic were lured by promises of free equipment, services or food made by her "marketer" co-schemers.

Significance: One of the distinctions of this otherwise rather ordinary case is that the clinic owner also agreed to make restitution payments of $1.711 million to cover what CMS paid out to reimburse the clinic for the medically unnecessary services involved in the scheme.