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

Molecular Lab Vigorously Denies But Pays $1.8 Million to Settle Fraud Charges

Case: The feds claim that Molecular Testing Labs, a toxicology and genetics lab in Washington State, paid local labs in exchange for Medicare and Tricare referrals; it then turned what had been an Anti-Kickback Statute offense into a False Claims Act violation by billing for the tests it provided as a result of those ill-gotten referrals. While unshakably persuaded of its innocence, the lab recognized that discretion is the better part of valor and agreed to pay out up to $1.8 million to settle.

Significance: While credible, Molecular's vigorous denial of wrongdoing is a potent reminder of the tough choice providers face when charged with fraud violations: invest a fortune in time, effort and legal fees to resist or pay a substantial settlement amount to make the situation go away. Citing the hundreds of thousands it had already racked up, a written statement from Molecular's chief compliance officer said that, like many health care providers do, it entered into the settlement so it could "stop spending our valuable resources on the case.

North Carolina Hospital Settles Self-Disclosed Kickback Claims for $2.2+ Million

Case: Rex Hospital, Inc., dba UNC Rex Healthcare, agreed to shell out $2,277,762 for kickbacks violations stemming from its deal to lease a doctor from a community hospital to provide cardiology services. In addition to paying the community hospital a market-based fee for the lease, the OIG contends Rex paid kickbacks by also paying the physician's salary and bonuses for the cardiology services provided, reimbursements that should have been made by the community hospital.

Significance: The price of the settlement appears relatively high, especially when you consider that Rex self-disclosed to the OIG.

Owner of MD Practices Settles Fraud Charges for $3.07 Million

Case: Individual physicians implicated in frauds committed by the practices and clinics they own is this month's predominant theme. Leading off is the MD owner of a pair of medical practices in Delaware and Maryland doing business as Got-A-Doc Walk-In for alleged false billing of Medicare and Medicaid for lab services, including services:

• Not medically necessary;
• Not performed by an eligible provider;
• Not provided at all; and
• Not properly documented.

Significance: As part of the settlement, the doctor has agreed to surrender his medical licenses. And the doctor's misery is just beginning insofar as the settlement covers only the civil charges and not his potential criminal liability stemming from the scheme.

Pain Clinic Co-Owner Pleads Guilty to Drug Testing Kickback Charges

Case: The Louisiana physician received $336,000 in kickbacks from a drug testing lab representing a percentage of the reimbursement proceeds generated via the referrals of Medicare patients' urine samples for testing over a two-year period. He'll be sentenced in March.

Significance: The other physician co-owner of Louisiana Spine & Sports LLC was indicted last year for his part in an alleged $4.4 million false billing scheme involving medically unnecessary quantitative urinalysis tests and billing for minor surgical procedures performed on days before or after patient visits.

Chicago Doctor Indicted for Approving Medically Unnecessary In-Home Tests

Case: Working out of a Chicago-based clinic, a doctor allegedly prescribed and authorized ultrasounds, and percutaneous allergen and nerve transmission tests for Medicare patients even though he knew the in-home tests weren't medically necessary. During the course of the four-year scheme, he approved the tests after they had been completed, the indictment contends. He now faces six fraud charges, each of which carries a maximum prison sentence of 10 years.

Significance: The details of the alleged scheme are particularly slimy—albeit not necessarily true. According to the indictment, the doctor attempted to cover his tracks by submitting fraudulent bills from multiple entities. Then, once the entities received payment from Medicare, they sent him a check representing a percentage of the proceeds as his share for the business.

10x Genomics Ordered to Pay $23.9 Million for Infringing Bio-Rad's Patents

Case: The Federal District Court jury found that 10x willfully infringed three genetic analysis technology patents that Bio-Rad licensed from the University of Chicago on an exclusive basis. Specifically, the jury concluded that all single-cell and linked-read genomics products sold by 10x, including GemCode Long Read, Chromium Genome/Exome and Chromium Single Cell 3 willfully infringed the patented technology.

Significance: The court case is just one front in the IP war between the firms. 10x has filed a complaint with the International Trade Commission accusing Bio-Rad of illegally importing microfluidic systems violating its own patents into the US for sale. 10x also issued a statement expressing its strong disagreement with the court verdict and its intention to appeal.