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Labs In Court: A roundup of recent cases and enforcement actions involving the diagnostics industry

by | Dec 11, 2017 | Enforcement-lir, Essential, Laboratory Industry Report

From - Laboratory Industry Report Case: A California cardio clinic and its physician owners will pay $1.2 million to settle charges of falsely billing Medicare and Medicaid for… . . . read more

Using Nuclear Stress Tests as Screening Procedure = Medical Necessity Violation

Case: A California cardio clinic and its physician owners will pay $1.2 million to settle charges of falsely billing Medicare and Medicaid for medically unnecessary nuclear stress tests (NSTs). The feds claim that clinic physicians automatically scheduled annual NSTs for patients without actually seeing them to determine the necessity of the costly procedure in violation of medical necessity rules and a CMS Local Coverage Determination banning use of NSTs as a screening procedure.

Significance: This is at least the second time this year that NSTs played a central role in a major False Claims Act action. This spring, a cardiologist, neurologist and four others associated with a New York City medical practice were arrested for falsely billing millions of dollars in medically unnecessary NSTs, which measure blood flow to the heart both when the patient is resting and stressed. There are three possible CPT codes for billing the imaging part of the test:

  • Code 78451(SPECT) when only one set of images is taken, either at rest or stress;
  • Code 78543 (Planar) when only one set of images is taken, either at rest or stress; and
  • Code 78452 may only be used when two sets of images are taken.

The practice got into hot water for listing only one code for “Nuclear Studies” in its superbill: 78452. Result: Physicians were forced to indicate that they performed both a resting and stress study, even if they actually performed only one part of the study. (See NIR, June 19, 2017, for more details about the case.)

Doctors Busted in $2.2 Million Opioid Drug Testing Scheme

Case: The year of the opioid crackdown continues. The most recent scheme involves a South Florida network that offered free rent and other kickbacks to physicians in exchange for referrals of insured drug addicts to reside in their sober homes. Residents were then subjected to regular drug testing. Four defendants were involved, including the network medical director who was sentenced to 48 months in prison and one year of supervised release. And as is becoming increasingly common in these cases, the doctor had to pay $2.198 million to make restitution for the money he stole.

Significance: While opioid scams involving drug tests have become common fare, this one seems to have been particularly egregious. The medical director created a drug testing regimen for each resident, including many he never actually examined, based on the bribes he got from the testing lab. He then used higher paying codes to bill Medicare for the exams. Adding insult to injury, residents were allowed to continue doping as long as they kept their mouths shut.

FDA Dishes Out Warning Letters for Marketing of Genetic Tests

Case: Direct-to-consumer (DTC) marketing of genetic tests has been a sore spot with the FDA since 2013 when the agency issued a warning letter ordering 23andMe to quit marketing its consumer testing kits. This fall, two other consumer genomics firms received DTC-related warning letters from the FDA, including:

  • DNA-Cardiocheck for selling its DNA-CardioCheck DTC test screening for genetic markers associated with heart disease and stroke; and
  • Interleukin for selling consumer tests identifying people with genetic predisposition for increased risk of heart attack, diabetes and obesity.

Significance: The timing of these new warning letters is ironic but far from coincidental. The FDA issued these warning letters right after it settled with 23andMe and announced a proposed new policy loosening up the restrictions on DTC marketing of non-FDA-approved consumer genetics tests.

Two Different Labs Get the Medicare Boot

Case: On Oct. 24, Total Lab Care, LLC accepted permanent exclusion from all federal health programs over allegations that it billed for testing urine toxicology samples referred by a physician to whom it paid improper financial remuneration. Just five days later, an independent lab in Southern California called Prohealth Neurodiagnostic, Inc. and its owner agreed to a five-year exclusion for allegedly billing nerve conduction studies listed in its Local Coverage Determination as screening exams and thus not billable under Medicare medical necessity criteria.

Significance: Exclusion of a clinical lab from participating in Medicare or other government health program is a relatively rare penalty. The occurrence of two of them in the span of less than a week is an even quirkier oddity.

BLS Conviction Count Continues to Mount

Case: At 38, the number of doctors convicted in the Biodiagnostic Laboratory Services LLC (BLS) scheme is enough to run a nice mid-size practice. Here is a profile of the latest two physician convictions.

Name Practice Allegations Penalties
Aiman Hamdan Cardiologist,
Patterson, NJ
After accepting a $500K loan from BLS, referred approximately $53,000 of Medicare patient blood samples to lab for testing from Oct. through Nov. 2008 (his wife also convicted of paying bribes) Potential penalties of:
30 years prison, one year supervised release +
$1 million fine
$15K restitution
Ahmed El Soury Internal Medicine,
Staten Island, NY
Accepted more than $66K in bribes for referring roughly $650K in patient blood specimens from March 2011 through April 2013 33 months in prison

Significance: The latest BLS scoresheet: 53 convictions, 38 of them doctors and over $13 million recovered via forfeiture. At least one more doctor is also awaiting sentencing.

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