UnitedHealthcare Insurance Co. has agreed to settle a lawsuit it filed in 2016 against five toxicology laboratory companies for $56.2 million.
The suit, filed in U.S. District Court for the Southern District of Florida, alleged that medical testing lab executives offered kickbacks in the form of partnership shares to treatment facilities and doctors in exchange for urine test referrals. Those payments, which totaled around $50 million, were disguised as partnership distributions, according to the litigation.
The labs named in the lawsuit were: Sky Toxicology, Frontier Toxicology, Hill Country Toxicology, Eclipse Toxicology and Axis Diagnostics, along with executives and owners of the labs. The labs were registered in Florida and Texas.
In addition to offering these disguised kickbacks, the defendants were alleged to have required those referring the tests to increase them through the referral of unnecessary and unauthorized tests.
The lawsuit followed an investigation, conducted by UnitedHealthcare, after its fraud investigation unit identified Sky Toxicology as a “significant outlier against national peer providers on both a claims-per-member and payments-per-member basis.”
UnitedHealthcare alleged that the defendants used “multiple corporate entities in an attempt to shield themselves from liability for their fraudulent conduct.”
The referring defendants were identified as addiction treatment facilities, their owners, physicians or physician practice groups that were taking in from tens of thousands of dollars to hundreds of thousands of dollars a month as a result of the alleged scheme.
The partnership shares were offered for less than $10,000, but the defendants were told that revenue from a share would exceed that amount every month, according to the suit. The more referrals, the more shares the referring entities were allowed to purchase.
In some instances, the tests were not ordered by physicians or contained forged physician authorizations, according to the lawsuit.
In addition, it was alleged that the defendants routinely waived any patient payment responsibilities, a practice specifically prohibited under Florida law.
The lawsuit filed by United was in response to a federal lawsuit the labs had filed in Texas against the insurer for refusing to pay claims for urinalysis tests.
In April, one of the defendants, Axis Diagnostics filed for Chapter 7 bankruptcy.
As we wrote about in April, the clinical lab industry is ripe for fraud and abuse. Providers and other referring entities would be well-advised to discuss any business agreements with legal counsel before entering into one.
The Health Law Offices of Anthony C. Vitale can assist you with business agreements and compliance programs designed to minimize risk exposure. Give us a call at 305-358-4500, or send an email to email@example.com and let’s discuss how we might be able to assist you.