Generally speaking, federal healthcare programs will only pay for services, including laboratory tests, that are “reasonable and necessary for the diagnosis or treatment of illness or injury.” 42 U.S.C. § 1395y(a)(1)(A). The government holds clinical laboratories liable, under the False Claims Act (FCA), for a variety of false and fraudulent conduct including:
- Billing Medicare or Medicaid for medically unnecessary tests
- Billing Medicare or Medicaid for testing performed without the treating physician’s consent or order
- Unbundling tests normally billed as a single expense
- Incentivizing physicians and other medical providers to obtain Medicare and/or Medicaid business in violation of the Stark Law and Anti-Kickback Statute
Notable examples of labs subject to FCA liability include:
- Millennium Health: Millennium Health, formerly Millennium Laboratories, agreed in October 2015 to pay $256 million to resolve allegations the company billing Medicare, Medicaid, and other federal health care programs for medically unnecessary drug and genetic testing and for giving “gifts” to physicians who agreed to refer expensive lab tests to Millennium.
- PremierTox LLC: Clinical laboratory PremierTox LLC paid $15.75M in February 2014 to settle allegations it, acting in concert with a chain of addiction treatment clinics, submitted claims to Medicare and a state Medicaid program for tests that were medically unnecessary and more expensive than those actually performed.
To find out more about whether a particular type of fraud is actionable under the False Claims Act, contact us today.