A roundup of recent cases and enforcement actions involving the diagnostics industry

Carolina Lab Owners Settle Kickback, False Claims Charges for Over $6 Million Case: At its apex, Physicians Choice Laboratory Services (PCLS) had over 450 employees in North and South Carolina. But while PCLS is now defunct, the same cannot be said of its two former owners, Douglas Smith and Philip McHugh, who have just agreed to fork over, respectively, $4.5 million and $2,021,795 to settle charges of falsely billing Medicare for millions of dollars in lab drug testing services over a two-year period between 2013 and 2015. Significance: Smith and McHugh were the kingpins in the alleged scheme under which PCLS paid physicians kickbacks in exchange for ordering tests from the lab. By subsequently billing Medicare for those services, the lab violated the False Claims Act. Smith is also one of the named defendants in a whistleblower lawsuit that a federal court in North Carolina said could go to trial in a May 2020 ruling. In December 2019, a former sales rep and lab manager for PCLS was assessed a penalty of nearly $650,000 for his role in the scheme.  Federal Court Tosses Age Discrimination Lawsuit against LabCorp Case: Why did LabCorp terminate the 65-year-old microbiology department manager after 42 years of service? The manager claimed she was fired because of her age; LabCorp said she was fired for her steadily declining performance. The lower federal court sided with LabCorp and dismissed the manager’s Age Discrimination in Employment Act (ADEA) claim without a trial. After reviewing the case for itself, the U.S. Court of Appeals for the 11^th Circuit made the same determination. Significance: As usual in ADEA cases, this case was all about the evidence, or lack thereof. All the manager had to support her accusation that LabCorp’s performance concerns were a pretext for age discrimination was circumstantial evidence. By contrast, LabCorp had detailed records documenting the manager’s poor performance, including metrics documenting the decline of the department starting in the years she assumed its management; it also produced warnings and other records of progressive disciplinary actions it took in the attempt, ultimately, unsuccessful, to help her improve [Henderson v. Lab. Corp. of Am. Holdings, 2021 U.S. App. LEXIS 10650, __ Fed. Appx. __, 2021 WL 1401462]. Massachusetts Mental Health Hospital Fined $65,000 for HIPAA Right of Access Violation Case: The HIPAA Privacy Rule gives providers 30 days and, in some instances, 60 days to respond to patients’ requests of access to their medical records. But it took Massachusetts behavioral health services provider Arbour Hospital five months and one Office for Civil Rights (OCR) intervention to finally provide the records one of its patients had requested. In addition to a $65,000 fine, Arbour had to agree to implement corrective actions under OCR’s supervision. Significance: The OCR has now handed out 18 fines under its HIPAA Right of Access Initiative since launching it in April 2019 to enforce rules requiring providers to grant individuals’ access to their own protected health information. So far, the highest of these fines is $200,000. Here’s a Scorecard of all announced settlements to date. OCR Right of Access Initiative Settlements Scorecard (as of April 28, 2021)

Provider	Settlement Amount*	Allegations
Banner Health ACE	$200,000	OCR cites two occasions in which Phoenix-based not-for-profit health system took about 6 months to provide patients their requested PHI
St. Joseph’s Hospital and Medical Center	$160,000	Phoenix hospital refused to provide PHI to patient’s mother even though she was his legal representative
NY Spine Medicine	$100,000	Neurology practice refuses patient’s multiple requests for copies of specific diagnostic films
Bayfront Hospital	$85,000	Florida hospital didn’t provide expectant mother timely access to the PHI of her unborn child
Korunda Medical	$85,000	After first refusing to provide it at all, Florida primary care and interventional pain management services provider sent patient’s PHI to third party in the wrong format and charged him excessive fees
Renown Health, P.C.	$75,000	Nevada private, not-for-profit health system didn’t timely honor patient’s request to transfer her EHR and billing records to a third party
Sharp Rees-Stealy Medical Centers	$70,000	California hospital and healthcare network didn’t timely honor request to transfer patient’s EHR to a third party
Beth Israel Lahey Health Behavioral Services	$70,000	Massachusetts provider ignored request of personal representative seeking access to her father’s PHI
Arbour Hospital	$65,000	Massachusetts mental health services provider kept patient waiting 5 months before granting access to his PHI
University of Cincinnati Medical Center, LLC	$65,000	Ohio academic medical center failed to respond to patient’s request to send an electronic copy of her medical records maintained in its electronic health record EHR to her lawyers
Housing Works Inc.	$38,000	New York City non-profit services provider refused patient’s request for a copy of his medical records
Peter Wrobel, M.D., P.C., dba Elite Primary Care	$36,000	Georgia primary care practice failed to provide patient access to his medical records
Village Plastic Surgery	$30,000	New Jersey practice failed to provide patient timely access to his medical records
Riverside Psychiatric Medical Group	$25,000	California medical group didn’t provide patient copy of her medical records despite repeated requests and OCR intervention
Dr. Rajendra Bhayani	$15,000	NY physician didn’t provide patient her medical records even after OCR intervened and closed the complaint
All Inclusive Medical Services, Inc.	$15,000	California multi-specialty family medicine clinic refused patient’s requests to inspect and receive a copy of her records
Wise Psychiatry, PC	$10,000	Colorado psychiatric firm refused to provide personal representative access to his minor son’s medical record
King MD	$3,500	Virginia psychiatric practice didn’t provide patient access to her medical records even after OCR intervened, provided technical assistance and closed the complaint

*In addition to the monetary settlement, each accused provider had to agree to implement a corrective action plan and allow the OCR to conduct close monitoring for one to two years Telemarketer Gets 10 Years in Jail for Genetic Screening Cancer Test Ripoff Case: High price points have made cancer screening genetic (CGx) tests fertile grounds for false billing and kickback scams—and federal enforcement action. A new case involving the owner of a Florida telemarketing call center is a pretty good illustration of how these schemes work. Telemarketers targeted seniors with calls falsely stating that Medicare covers expensive CGx tests costing up to $6,000 apiece. The call center owner then paid kickbacks to telemedicine companies to get doctors’ orders authorizing the tests. He then sold the genetic tests and doctor’s orders to labs in exchange for illegal kickbacks, which he concealed by submitting invoices to the labs and other marketers making it look like he was being paid for hourly marketing services, rather than per referral. By the time it was uncovered, the scam had generated over $3.3 million in fraudulent CGx claims. Significance: What makes this case somewhat unusual is what happened after the you-know-what hit the fan. Rather than take the safe path of settlement, the owner decided to take his chances with a trial. The strategy backfired when the federal jury returned a guilty verdict on seven counts, including health care fraud and receiving illegal kickbacks. And now the court has pronounced sentence: 10 years in a federal prison. Colorado Grand Jury Hands Down First of What Promises to Be Many COVID Relief Fraud Indictments Case: Almost from the moment Congress passed COVID-19 relief programs, federal enforcement agents have been sounding the warning on relief fraud scams. And now the prosecutions have begun. In one of the first cases, the Justice Department indicted a 56-year-old Colorado for stealing nearly $300,000 from three different COVID relief programs. The feds claim the accused siphoned the money from a medical clinic’s account into his own personal bank account and spent it on travel and lavish home improvements. Significance: The COVID relief programs allegedly targeted in this case are the ones in which many labs and lab owners participated, including:

• The Accelerated and Advance Payment Program, which provides reimbursement funds in advance of service to help labs and other Medicare providers maintain cash flow during national emergencies;
• The $50 billion Provider Relief Fund for labs and other providers involved in coronavirus response; and
• The Paycheck Protection Program providing 1 percent loans to help small businesses meet their payroll, rent, mortgage and utilities obligations.