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Enforcement Trends: The Urine Drug Testing Crackdown and Three Ways to Avoid It

by | Jul 31, 2023 | Enforcement-nir, Essential, National Lab Reporter

False billing of urine drug tests (UDTs) continues to be a focus for enforcement agencies in 2023, here’s how to avoid compliance issues.

Halfway through 2023, it’s clear that genetic testing, telehealth, and COVID-19 fraud are hot issues for government investigation right now. But enforcement doesn’t work according to flavor-of-the-month principles. To assess your own lab’s risk of investigation, you need to consider not just the latest national enforcement campaigns, but also the issues that command a steady share of government attention every year. Prominent among these perennials is false billing of urine drug tests (UDTs). Here’s a quick briefing on UDT enforcement trends through the first part of the year, a Scorecard synopsis of the major cases, and a list of steps you can take to protect your lab.

The Year in UDTs Enforcement

Through June 30, 2023, the U.S. Department of Justice (DOJ) has reported 10 high-ticket UDT fraud cases targeting 16 defendants. Among these actions are:

    • five civil settlements totaling nearly $13.6 million in aggregate recoveries,

    • three sets of convictions,

    • one sentence imposed on a previously convicted defendant, and

  • one federal grand jury indictment.

Though 10 cases may not sound like a lot, keep in mind that some of these cases are just the most recent steps in a wider action targeting other defendants for their roles in the same schemes. In addition, our count doesn’t include the many UDT cases that go unreported in the same time span.

In each reported case, the accused is a toxicology lab, pain center, or addictions clinic that performed the UDTs and/or the owner or principal of such a provider. The alleged offense is also a constant—falsely billing Medicare and other federal health programs for UDTs that aren’t medically necessary in accordance with coverage rules. Several of the cases involve separate, but related offenses, including money laundering and paying or offering remuneration for UDT referrals in violation of the Anti-Kickback Statute (AKS).

UDT Case Scorecard: 2023 DOJ Reported Enforcement Actions

Defendant(s) Case Status/Disposition Allegations
Richard Reid, co-owner, Northwest Physicians Laboratory (Oregon) Sentenced to two years’ prison for five felony convictions in UDT fraud scheme Helped obtain over $3.7 million in kickbacks disguised as marketing services fees to physicians in exchange for referrals resulting in over $6.5 million in improper Medicare and TRICARE payments
Donald Booker, owner, United Diagnostic Laboratories (North Carolina) Convicted of (but not yet sentenced for) money laundering, AKS violations, and conspiracy to commit healthcare fraud Ran scheme to recruit eligible people to enroll in Medicaid, requiring them to submit urine samples for medically unnecessary UDTs that were billed to Medicaid, generating $11 million in fraudulent payments
Solid Diagnostics, Inc., and owner, Rita Ausiejus (Massachusetts) Indicted by federal grand jury for Medicaid false claims Falsely billed Medicaid for over $400,000 in UDTs to monitor sober home residents; tests were neither properly ordered by physicians nor medically necessary
Ellis Pain Center (EPC), and owner, Dr. Mark A. Ellis (Georgia) $5 million civil settlement Falsely billed Medicare for expensive quantitative UDTs that were medically unnecessary, were not actually performed, and couldn’t have been conducted on the practice’s immunoassay analyzer
Dr. William Lawrence Siefert and Dr. Timothy Ehn (Kentucky) Convicted of healthcare fraud with sentencing scheduled for September Ran scheme using Northern Kentucky Center for Pain Relief to bill Medicaid for medically unnecessary UDTs run on faulty equipment
Genotox Laboratories Ltd. (Texas) $5.9 million civil settlement Paid volume-based commissions to third-party marketers in violation of the AKS and billed federal healthcare programs for medically unnecessary UDTs, including via use of illegal standing orders dressed as “custom profiles”
Blue Waters Assessment and Testing Services + VerraLab JA, doing business as BioTap Medical (Kentucky) $1.74 million civil settlement Falsely billed Medicare and Medicaid for medically unnecessary UDTs ordered by family court for non-medical surveillance
Georgia Pain Management, and owner, Dr. James Ellner, + Samson Pain Center (Georgia) $625,000 civil settlement Falsely billed Medicare and TRICARE for medically unnecessary UDTs and non-reimbursable E&M services reported with Modifier 25
Florentina Mayko, CEO, Pain Medicine of York (Pennsylvania) Pled guilty to one count of conspiracy to commit healthcare fraud Falsely billed Medicare for over $10 million in medically unnecessary UDTs performed on chronic opioid patients at Pain Medicine of York clinics
Recovery Services (Kentucky) $300,000 civil settlement Falsely billed Medicaid for UDTs for patients who didn’t receive individualized medical assessments, as well as for inpatients, despite being licensed to provide only outpatient services
Enforcement actions are listed in chronological order.1-10

Impact on You

The key takeaway is that labs involved in performing UDTs for Medicare and other federal health plan patients must take great care to ensure that their marketing, billing, and coding practices are compliant. The federal cases can bolster your compliance efforts by demonstrating the kinds of misconduct that the DOJ and other federal enforcers are targeting.

Here are three things you need to look out for when verifying your compliance:

1. Automatically Performing and Billing for Quantitative UDTs

2022 saw a string of high-cost settlements involving claims of falsely billing medically unnecessary quantitative UDTs, including separate $11.6 million settlements with Nevada-based MD Spine Solutions LLC and North Carolina-based Radeas LLC.11,12 The pattern has continued in 2023 with Georgia-based Ellis Pain Center and its physician owner agreeing to settle quantitative testing false billing charges for $5 million.

Compliance Strategy: Recognize that Medicare covers two forms of UDTs as long as they’re medically necessary:

    1. Inexpensive presumptive tests for qualitative detection of drugs.

  1. High-cost tests that quantitatively confirm the results of presumptive tests and identify the types of drugs used.

Under the coverage rules, a physician must order the confirmatory test only after reviewing the results of the presumptive test and documenting that review in the patient’s medical record. One common mistake that causes compliance issues for UDT labs like Ellis and Radeas is performing confirmatory tests automatically, rather than awaiting the results of the presumptive test and a physician’s order based on those results. This reflex testing approach means that, when auditors search for documentation supporting the medical necessity of the confirmatory tests, they find that the cupboard is bare.

2. Improper Use of Standing Orders

Tests are deemed medically necessary only when ordered by a physician or non-physician practitioner (NPP) to diagnose or treat a particular patient based on an assessment of the patient’s condition. Accordingly, “standing orders” for repeat tests over a specific time period are highly problematic. Texas toxicology lab Genotox learned this lesson the hard way, paying $5.9 million to settle claims of UDT standing order misuse—the largest UDTs settlement of the year so far.

Compliance Strategy: Although standing orders might be justified for certain long-term treatment plans, you should generally avoid using them for UDTs. Consider establishing a policy against performing UDTs without first confirming that they’ve been ordered by a physician or NPP for that patient. UDTs should also not be included in “custom profiles” unless the requisition form clearly lists each component test in the profile and gives the ordering physician/NPP the option not to order the test for that patient.

3. Billing Medicare for Non-Medical UDTs

Like many toxicology labs, you may perform UDTs for non-medical purposes, such as under employer drug testing programs to determine whether employees performing safety-sensitive jobs are impaired at work. Courts and law enforcement officials may also order UDTs, however, these tests don’t meet the criteria for medical necessity, so billing Medicare for them exposes you to liability for submitting a false claim. That’s why Kentucky lab BioTap and drug testing specimen collection agency Blue Waters Assessment and Testing Services had to pay over $1.7 million for billing Medicare and Medicaid for non-medical tests ordered by a state family court.

Compliance Strategy: Implement a policy that makes it clear that UDTs may only be billed to federal health programs if they’re performed for medical purposes. The policy should clearly ban billing of UDTs ordered by employers, courts, law enforcement agencies, and for other non-medical reasons.


    1. https://www.justice.gov/usao-wdwa/pr/former-co-owner-and-sales-manager-defunct-medical-testing-lab-sentenced-prison

    1. https://www.justice.gov/usao-wdnc/pr/charlotte-man-convicted-defrauding-north-carolina-medicaid-program

    1. https://www.mass.gov/news/burlington-laboratory-and-owner-charged-for-drug-test-fraud

    1. https://www.justice.gov/usao-mdga/pr/athens-georgia-pain-medicine-owner-practice-manager-agree-5-million-settlement

    1. https://www.justice.gov/opa/pr/two-doctors-convicted-unnecessary-urinalysis-testing-scheme

    1. https://www.justice.gov/opa/pr/texas-laboratory-agrees-pay-59-million-settle-allegations-kickbacks-third-party-marketers-and

    1. https://www.justice.gov/usao-edky/pr/drug-testing-companies-agree-collectively-pay-17-million-resolve-false-claims-act

    1. https://www.justice.gov/usao-ndga/pr/woodstock-pain-management-doctor-and-clinics-pay-625000-resolve-false-claims-act

    1. https://www.justice.gov/usao-mdpa/pr/cambria-county-woman-pleads-guilty-conspiracy-commit-health-care-fraud

    1. https://www.justice.gov/usao-edky/pr/substance-use-recovery-center-agrees-pay-300000-resolve-alleged-false-claims-act

    1. https://www.justice.gov/usao-ma/pr/md-labs-and-its-co-founders-agree-pay-16-million-resolve-allegations-fraudulent-billing

    1. https://www.justice.gov/usao-ma/pr/radeas-llc-agrees-pay-116-million-resolve-allegations-fraudulent-billing

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