Home 5 Lab Industry Advisor 5 National Lab Reporter 5 Free Urine Testing Supplies Might Violate Stark, Anti-Kickback Laws

Free Urine Testing Supplies Might Violate Stark, Anti-Kickback Laws

by | Feb 25, 2015 | National Lab Reporter

A federal district court in Florida handed down a split summary judgment ruling May 5 in litigation between two competing clinical laboratories on whether the provision of free urine drug screening cups that include testing strips in the cups violates the Stark self-referral and anti-kickback laws (Ameritox, Ltd. v. Millennium Labs., Inc., 2014 BL 124965, […]

A federal district court in Florida handed down a split summary judgment ruling May 5 in litigation between two competing clinical laboratories on whether the provision of free urine drug screening cups that include testing strips in the cups violates the Stark self-referral and anti-kickback laws (Ameritox, Ltd. v. Millennium Labs., Inc., 2014 BL 124965, M.D. Fla., No. 8:11-cv-00775-SCB-TBM, 5/5/14). The U.S. District Court for the Middle District of Florida said the issue of whether the free point-of-care testing (POCT) cups provided by defendant Millennium Laboratories Inc. violated the Stark and anti-kickback laws turned on whether the free cups constituted remuneration. Judge Susan C. Bucklew said there was a genuine issue of material fact as to whether the free POCT cups were remuneration for physicians who agreed not to bill for preliminary test results that the POCT cups provide, and she denied summary judgment to plaintiff Ameritox on that specific issue. Bucklew said, however, that physicians not billing for preliminary results for reasons other than an agreement with Millennium in exchange for free POCT cups were receiving remuneration for purposes of the Stark and anti-kickback laws and granted that portion of Ameritox’s summary judgment motion. Bucklew also rejected Millennium’s contention that the POCT cups fell within a Stark law remuneration exception for testing supplies. Free Supplies, Unfair Competition Ameritox’s lawsuit alleged that Millennium’s nationwide marketing strategy for its urine drug testing practices violates the Lanham Act and state unfair competition laws through the provision of illegal financial inducements to health care providers, including free POCT cups. Ameritox alleged that Millennium gave physicians the free POCT cups on the condition that they wouldn’t bill for the preliminary results that the POCT cups provided on the spot but would send them to Millennium for confirmation testing and could bill for that service. According to Ameritox, the POCT cups normally cost about $5, and a physician can bill $20 for the preliminary test results. Ameritox claimed that a physician can receive reimbursement of $180 from confirmation testing sent to a lab like Millennium. Ameritox alleged that physicians receiving Millennium’s free POCT cups were receiving benefits in the form of a free sample cup and the ability to provide patients with preliminary test results. Ameritox said that although physicians wouldn’t be able to bill for the preliminary test results with Millennium’s free POCT cups, they would be able to bill for the higher reimbursement lab confirmation test using the specimen from the POCT cup. Value of POCT Cups Disputed Millennium argued that its POCT cups weren’t remuneration because the physicians couldn’t bill for the preliminary test results and therefore provided the physicians with no financial value. Millennium also argued that two exceptions to the Stark law’s definition of remuneration applied to the POCT cups: the provision of items used solely to collect, transport, or store specimens by the entity providing the item (42 U.S.C. §1395nn(h)(1)(C)(ii)(I)) and the provision of an item used solely to communicate testing results from a specimen by the providing entity (42 U.S.C. §1395nn(h)(1)(C)(ii)(II)). Bucklew said a jury would have to decide whether a physician who could bill for preliminary urine testing, but gives up the $20 reimbursement potential because of an agreement with Millennium to receive free POCT cups, received remuneration. Bucklew said that physicians who wouldn’t bill for preliminary testing for reasons other than an agreement with Millennium were clearly receiving remuneration under the Stark law through free POCT cups they otherwise would have to purchase and that Ameritox was entitled to summary judgment on that issue. The court said its analysis of whether the free POCT cups constituted improper remuneration under the Stark law was applicable in the same manner to whether the free POCT cups were improper remuneration under the anti-kickback law. The court held, however, that neither Stark remuneration exception applied to Millennium’s provision of the free POCT cups. The court said that the POCT cups aren’t used solely to collect and transport urine specimens because they also provide the physician with a preliminary testing result. Further, the POCT cups don’t communicate the results to Millennium, the providing entity, but to the physician administering the test. Takeaway: A split ruling on whether free urine testing supplies violate the Stark law and anti-kickback statute further complicates the issue of when labs are allowed to provide free supplies to referring physcians. 

Subscribe to view Essential

Start a Free Trial for immediate access to this article