Labs Beware: Testing and Billing Every Specimen May Result in a False Claims Lawsuit

Recently, the U.S. Attorney’s Office for the District of Connecticut, announced an $845 million settlement for a False Claims with a substance abuse provider and a laboratory.

The allegations were that a Connecticut substance abuse provider, Crossroads, Inc., submitted excessive urinalysis testing for its patients insured by Connecticut’s Medicaid program. The lab, Secon Laboratories, received the orders for testing and submitted the claims for payment.

Substance abuse providers may request two types of urinalysis testing: presumptive (screening) and definitive (confirmatory) drug tests. The purpose of these tests is for treatment and medical monitoring, to insure the patient is adhering to the treatment program and is not using illicit substances while undergoing treatment.

All payors set limitations on the number of presumptive and confirmatory drug tests that be ordered for substance abuse treatment providers. However, the allegations against Crossroads and Secon labs states that Crossroads was ordering, “duplicative tests for its residents more than two times a week, and as often as three, four, or five times a week.â€

Regardless, the laboratory continued to process the specimens and submit the claims to Connecticut’s Medicaid program. The government alleged that the lab knew, or should have known, that the tests were not medically necessary.

This case should place laboratories on notice that they cannot just process every specimen they receive. Within the past few years, laboratories have increasingly come under scrutiny by third- party payors and regulatory agencies for kickback allegations, false claims, and failing to follow reimbursement guidelines.

Last April, for example, Logan Laboratories Inc. a reference laboratory in Tampa; Tampa Pain Relief Centers Inc., a Tampa-based pain clinic and two of their former executives, agreed to pay $41 million to resolve alleged violations of the False Claims Act for billing Medicare, Medicaid, TRICARE, and other federal health care programs for medically unnecessary Urine Drug Testing (UDT).

As in this case, the government alleged that the defendants developed and implemented a policy and practice of automatically ordering both presumptive and definitive UDT for all patients at every visit, without any physician making an individualized determination that either test was medically necessary for the particular patients for whom the tests were ordered. 

Payors are continuing to hold labs accountable for the specimens they test and the claims they submit, regardless of what the substance abuse provider orders.

The Health Law Offices of Anthony C. Vitale has experience representing high-complexity laboratories in a variety of criminal, civil, and regulatory issues.  Please contact us for a free consultation if you have any questions related to regulatory issues related to laboratory testing.

For more information contact us at  305-358-4500 or email info@vitalehealthlaw.com.