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

Insurer Sues Florida Lab and California Hospital for Toxicology Test Billing Scam

Case: Anthem Blue Cross Blue Shield is suing Reliance Laboratory Testing for allegedly conspiring with California hospital Sonoma West Medical Center to create a fraudulent billing organization in a bid to get around Anthem’s $32 per test fee cap. By billing toxicology tests through the hospital rather than the Florida Reliance lab that performed them, Sonoma West was able to bill $3,500 per claim, the suit charges. Over a nine-month period, Sonoma West submitted more than 15,000 netting $16 million in payments, according to the complaint.

Significance: This is the latest in a growing line of private insurer suits targeting labs for test billing rip offs. (For more details, see GCA, May 23, 2018.) Anthem says it got wise to the scheme after receiving a call from a Missouri health plan member saying she had received a statement from Sonoma West even though she had never been to California. After investigating and finding that patients listed on Sonoma West claims were never patients at the hospital, Anthem put a stop to the scheme by implementing a “zero pay” system edit that Anthem into its toxicology claims software system.

Midwest Lab & Pain Clinics at Center of Massive Opioid Distribution Scheme

Case: The feds filed criminal charges against a CEO and four physicians as part of an investigation into a $200 million health care fraud scheme involving a network of Michigan and Ohio pain clinics, labs and other providers responsible for the distribution of over 4.2 million doses of medically unnecessary opioid injections, many of which were resold on the streets. The CEO and owner of the clinics and labs allegedly conspired with clinic physicians to prescribe oxycodone, hydrocodone, oxymorphone and other controlled substances to Medicare beneficiaries who did not need them, including addicts. Beneficiaries were also required to submit to expensive, medically unnecessary and painful injections to obtain the drugs, the indictment charges.

Significance: This case is typical of the new face of health care fraud enforcement in the opioid epidemic era. It began when Medicare conducted a medical review of the injection claims and determined that 100% of the claims were not eligible for Medicare reimbursement and summarily suspended the billing privileges of the pain clinics involved.  The labs allegedly got involved by performing medically unnecessary urine drug tests ordered by clinic physicians. After medical review of lab claims determined that 95% of claims failed to meet Medicare reimbursement criteria, the lab was ordered to repay $6.9 million to Medicare.

Psychiatrist Pays $805K to Settle Urine Drug Test Billing Fraud Claims

Case: The DOJ charged the owner of a Connecticut psychiatric practice of false billing of urine drug screening tests. The practice allegedly tested urine samples collected from patients with substance use disorders for different classes of drugs and billed each class tested for as if it were a separate patient encounter. Under Medicare and Medicaid rules, urine tests screening for multiple classes of drugs are considered one test since they are conducted on a single urine sample. The alleged abuses, which involved Medicare and Connecticut Medicaid, continued over a nearly three-year period.

Significance: The case, the latest in a string of urine drug test abuse actions against physicians, was originally brought by a whistleblower, a former employee of the practice, who will get $99,113 of the settlement.

Health Care CEO Charged with Paying Kickbacks to Pill Mill Doctor

Case: The former owner and CEO of Alabama chronic care management provider MyPractice24, Inc. has been indicted for an alleged kickback scam involving what has become Public Enemy Number One: abuses involving opioid drugs.  The feds claim the CEO offered not only cash bribes but also free chronic care management and medical billing services to a Montgomery physician and his staff for referring patients to MyPractice24. The CEO also allegedly waived Medicare co-pays to recruit patients to enroll in its chronic care management program.

Significance: The physician who allegedly took this bundle of freebies from MyPractice24 has since pleaded guilty to illegal drug distribution, health care fraud and money laundering. And once one domino falls, others typically follow. Thus, it seems highly likely that once they are done with the CEO, the prosecutors will focus on lower level staff managers within both MyPractice24 and the Montgomery practice.