https://www.ascp.org/content/news-archive/news-detail/2020/08/12/beyond-covid-19-the-6-biggest-lab-compliance-stories-that-almost-nobody-is-paying-attention-to
Beyond COVID-19: The 6 Biggest Lab Compliance Stories That Almost Nobody Is Paying Attention To
If not burnout, you may be suffering from a case of COVID-19 fatigue right now. And you’re not alone. The monster virus has seemingly consumed everything in its path over the past six months, including the world’s attention. While completely understandable, the current fixation on COVID-19 belies the fact that there are other important developments taking place that may directly affect your lab. So, as we move into the second half of 2020, let’s step back and recognize the year’s biggest non-COVID-19 stories in lab compliance that have flown under the radar due to the pandemic.
1. The Continuing Crackdown on Urine Drug Testing
Before the pandemic, the opioid crisis was the primary driver of health care fraud and abuse enforcement activity. COVID-19 has done little to alleviate either the opioid problem or level of pressure enforcers are exerting against labs and other providers involved in opioid-related testing scams, most of them for billing Medicare and Medicaid for medically unnecessary drug tests. Since April 24, there have been at least five high profile settlements or convictions announced, as summarized by the Scorecard below:
Scorecard: Recent Medically Unnecessary Drug Testing Enforcement Actions
Status of Case | Accusations |
Operators of American Toxicology Labs (Virginia) plead guilty to fraud + await sentencing | Excluded provider opens and runs a lab that generates $8.5 million in billings for urine screens for entities representing themselves to be opioid treatment facilities |
Co-founder of Liberation Way drug and alcohol rehab clinic in Pennsylvania sentenced to 37 months’ prison + $3.1 million in restitution for health fraud conspiracy* | Defendant ran an overbilling and elaborate kickback scheme involving thousands of medically unnecessary urine tests sent to Florida-based labs for analysis |
Physician owner of Seattle Pain Center + Northwest Analytics testing lab pays $2.85 million to settle false claims charges | Clinics required all patients to undergo urine drug screening, generating thousands of medically unnecessary tests performed by the lab and then billed to Medicare + Medicaid |
Connecticut Counseling Centers pays $295K to settle claims of overbilling Medicaid for outpatient substance abuse services | Methadone clinic billed Medicaid for urine drug tests even though reimbursement for those services were included as part of its bundled weekly payment rate |
Logan Laboratories and Tampa Pain Relief Centers, Inc. + two executives pay $535,449 to settle claims of falsely billing Medicaid for medically unnecessary urine drug tests | Defendants automatically ordered both presumptive and definitive urine drug testing for all patients at every visit, without having a physician determine that the testing was medically necessary for those particular patients |
Lab owner sentenced |
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*Owner of Florida lab separately sentenced to 15 months’ prison and $3.4 million in restitution for his part in scheme
2. The Continuing Crackdown on Genetic Testing Consumer Scams
Consumer scams involving genetic testing labs (CGx) continue to represent perhaps the fastest-growing segment of the federal enforcement industry, probably because they target the most vulnerable. Far from slowing the momentum, the pandemic is actually fueling the scammers by creating new opportunities for SARS-CoV-2 testing schemes.
Under the typical modus operandi, “recruiters” contact Medicare beneficiaries online, on the phone or face-to-face at health fairs, senior centers, low-income housing areas or religious institutions like churches and synagogues promising free genetic testing to determine the individual’s cancer risks and how they’d respond to certain drugs in exchange for a cheek swab, personal Medicare information and a copy of their driver’s license. Next, the scammers contact the beneficiaries’ doctors and ask them to order the tests in return for a cut of the Medicare payment. Even if the doctor refuses, the scammers can count on the cadre of doctors they’ve lined up who are willing to prescribe the tests without seeing or making a determination of whether those tests are medically necessary.
The enforcement momentum that began in 2019 with the nationwide “Operation Double Helix” takedown has continued into 2020. Consider the following cases, all of which came down since June:
- July 9: Pennsylvania U.S. Attorney indicts seven people for role in massive CGx scam in which physicians were paid kickbacks of $5,000 to order more than $2 million worth of medically unnecessary CGx tests;
- July 1: California-based molecular testing firm Agendia, Inc. pays $8.25 million to settle charges of running a nationwide scheme to falsely bill Medicare for its flagship MammaPrint genetic test for predicting breast cancer recurrence risk;
- June 5: The operator of recruiting firm Privy Health Inc. pled guilty to conspiring with a Florida lab network and ordering physician to bill Medicare for nearly $5 million in CGx tests without regard to medical necessity and will be sentenced in October; and
- June 3: Owners of labs in Texas and Mississippi admitted their roles in a scheme to pay kickbacks in exchange for referrals of patient DNA samples for genetic testing and are awaiting sentencing.
Owners of Texas and Mississippi Laboratories Admit Roles in Kickback Scheme Related to Genetic Testing
NEWARK, N.J. – The owners of two clinical laboratories in Texas and Mississippi today admitted their roles in a scheme to pay kickbacks in exchange for referrals of patient DNA samples and genetic tests to the laboratories, U.S. Attorney Craig Carpenito announced.
Sherman Kennerson, 55, of Plano, Texas, and Jeffrey Madison, 54, of DeSoto, Texas, each pleaded guilty by videoconference before U.S. District Judge Brian R. Martinotti to one count of conspiracy to defraud the United States in connection with a scheme to violate the Anti-Kickback Statute.
According to documents filed in this case and a related matter and statements made in court:
Kennerson and Madison co-owned and operated with other individuals Spectrum Diagnostic Labs LLC (Spectrum Lab) and Metric Lab Services LLC (Metric Lab), two clinical laboratories, located in Texas and Mississippi, respectively, that performed genetic tests and submitted claims to Medicare. Kennerson and Madison oversaw the laboratories’ marketing and sales operations through which outside marketing groups recruited physicians to refer patients’ DNA samples to the laboratories for genetic tests and related services.
Kennerson and Madison paid bribes to Ark Laboratory Network LLC (Ark), one the marketing groups for Spectrum Lab and Metric Lab, and Jeffrey Tamulski, to induce Ark to refer patients’ DNA samples to the laboratories. Tamulski and the owners of Ark, Edward B. Kostishion, Jeremy M. Richey, and Kacey C. Plaisance, were previously charged by indictment in September 2019 in connection with a related kickback conspiracy involving referrals to laboratories for genetic testing. Plaisance pleaded guilty to his role in the conspiracy on May 6, 2020.
As part of the scheme, the laboratories entered into sham agreements with Ark and Tamulski under which Ark purported to provide various consulting, marketing, and other services at an hourly rate. Kennerson and Madison, however, paid Ark and Tamulski in exchange for referrals and DNA samples based on a percentage of the revenue the laboratories received from federal health care programs, including Medicare. Once the amount of the bribe was calculated, Ark and Tamulski drafted and submitted sham invoices to the laboratories that backed into the agreed upon bribe amount and attempted to conceal the scheme through describing various services provided at hourly rates. Metric Lab paid Ark over $136,000 in bribes and the laboratories received over $517,000 in payments from Medicare for claims connected to the kickback scheme with Ark and Tamulski.
The conspiracy charge to which Kennerson and Madison each pleaded guilty carries a maximum penalty of five years in prison and a fine of $250,000, or twice the gross gain or loss from the offense, whichever is greatest. Sentencing for both defendants is scheduled for Oct. 5, 2020.
U.S. Attorney Carpenito credited the U.S. Department of Health and Human Services, Office of Inspector General, under the direction of Special Agent in Charge Scott J. Lampert; and special agents of the U.S. Attorney’s Office for the District of New Jersey, with the investigation leading to today’s guilty pleas.
The government is represented by Senior Trial Counsel Bernard J. Cooney of the Health Care Fraud Unit of the U.S. Attorney’s Office in Newark.
The charge and allegations against the remaining defendants are merely accusations, and they are presumed innocent unless and until proven guilty.
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