Clinical Lab Settles Fraud Allegations

A Nevada-based clinical lab and two of its owners recently agreed to pay up to $16 million to settle allegations that the lab submitted false claims for payment to Medicare, Medicaid and other federal healthcare programs.

In addition, the lab, MD Spine Solutions LLC (MD Labs Inc.), and its co-founders, Denis Grizelj and Matthew Rutledge, signed a Corporate Integrity Agreement with the Department of Health and Human Services Office of the Inspector General outlining steps that will be taken to ensure future compliance.

Corporate Integrity Agreements are usually for a period of time and outline the obligations a healthcare entity agrees to as part of a civil settlement in exchange for avoiding exclusion from participating in federal healthcare programs.

According to the settlement agreement, the company and its founders admitted that between 2015 and 2019, MD Labs regularly billed federal healthcare programs for medically unnecessary urine drug testing. Specifically, it was alleged that the lab performed and billed for two types of tests: One is an inexpensive “presumptive” test that quickly provides results. The other is a more expensive “confirmatory” test. They were conducted at the same time and the results were simultaneously submitted to healthcare providers, according to the OIG. This was done knowing that doctors would not review the inexpensive “presumptive” test when they already had the more conclusive test results. At the same time, the co-owners knew that without the less expensive test, the doctors had nothing to confirm and there was no reason to bill for the more expensive confirmatory test result.

The allegations originated in a lawsuit filed by a whistleblower under the False Claims Act.

Under the terms of the settlement agreement, MD Labs and the co-owners will pay the government and various states no less than $11.6 million and up to $16 million, depending on the lab’s financial circumstances over a five-year period. In exchange, the government will not seek to exclude the lab from participating in federal healthcare programs.

The Corporate Integrity Agreement requires MD Labs to bring in a compliance officer within 90 days to develop and implement policies and procedures to ensure the company remains in compliance. The company also must appoint a compliance committee to oversee areas of risk develop and implement compliance policies and procedures and properly train employees regarding the compliance requirements, among other things.

Corporate Integrity Agreements are an important tool that OIG has to ensure compliance with healthcare rules and laws. Because they essentially are contractual obligations, failure to comply with corporate integrity agreements can have serious consequences including exclusion of participation in federal healthcare programs, meaning a healthcare provider no longer can be reimbursed by those programs.

The Health Law Offices of Anthony C. Vitale can help you to develop an effective compliance program that allows you to identify and correct any problems before you become the target of an investigation. Should or your company become the target of an investigation, an effective compliance program may help you to mitigate or eliminate potential sanctions, penalties, and program exclusions. Give us a call at (305) 358-4500 or email

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The Health Law Offices of Anthony C. Vitale