On November 4, 2021, the Department of Justice (DOJ) announced the conviction of several South Florida addiction treatment facility operators following a seven-week trial. The initial indictment was filed in September 2020, charging ten defendants for their alleged conduct in committing health care fraud, wire fraud, violations of the Eliminating Kickbacks in Recovery Act (EKRA), the Anti-Kickback Statute, and money laundering. The defendants included the co-owners of two entities providing treatment and therapy for substance use disorder, several other management level individuals, a referring chiropractor, and several marketing employees.

As part of the criminal complaint, the DOJ investigated the relationship between the two addiction treatment facilities, the activities of the patient brokers, and the relationships the addiction treatment facilities had with seven different laboratories. The criminal complaint alleged that patient brokers paid patients, offered them illegal drugs so they would be eligible to be admitted to the addiction treatment facilities, and then ordered expensive, excessive, and medically unnecessary urine drug tests and blood tests that were not reviewed timely or not appropriately utilized in the patients’ treatment at the addiction treatment facilities. Additionally, the addiction treatment facilities would change laboratories if a laboratory failed to refer patients to the addiction treatment facilities. Such testing included ordering large definitive panels, too-frequent testing before results could be returned, and a lack of clinical response to the ordering of the tests. There are also allegations that one laboratory allowed an officer of the addiction treatment facilities to have a financial interest in the laboratory, which laboratory paid the owners of the addiction treatment facilities but tried to disguise the payments by paying shell companies of the the owners of the addiction facility.

Ultimately, the two operators of the addiction treatment facilities were convicted for billing approximately $112 million for services that were never provided or medically unnecessary, and for paying and receiving kickbacks to patients and from testing laboratories.  Their sentencing is scheduled for January 2022.

Additionally, in yet another case involving toxicology testing and concerns related to alleged excessive and medically unnecessary urine drug tests, the DOJ announced on October 22, 2021, that two Texas physicians who had co-owned a now-defunct pain clinic reached a $3.9 million settlement with the federal government.

The settlement agreement resolves allegations, without a concession of liability, that the physicians had knowingly caused false claims to be submitted to Medicare, Medicaid, and TRICARE by ordering excessive and unnecessary urine drug testing, without an individualized assessment of patient need, which tests were not “reasonable and necessary for the diagnosis or treatment of an illness or injury,” as required by 42 U.S.C. § 1395y(a)(1)(A).

The underlying allegations by the DOJ were that the two had opened an in-house laboratory in their pain clinic and had drafted their own drug testing protocols, which were designed to increase how frequently patients would receive urine drug tests and the substances for which the in-house laboratory would test. The DOJ contended that the physicians were aware that their in-house laboratory was testing urine samples for an excessive number of metabolites that were not specific to patient need, and that it was being done to sustain the business.

These are just a few of the several enforcement actions taken recently by the DOJ related to fraudulent billing for excessive and medically unnecessary lab testing, and they highlight the necessity of monitoring for unnecessary testing, ensuring that the results are turned around on a timely basis and used in patient care, and that there are not improper relationships between providers.  Laboratories should be mindful that they have the ultimate responsibility of ensuring that they bill for medically necessary tests, even though it is the ordering providers’ responsibility to determine such medical necessity. It is apparent that the DOJ is focused on ensuring such compliance.

*This post was co-authored by Erin Howard, legal intern at Robinson+Cole. Erin is not yet admitted to practice law.