Texas Lab Must Repay Government $10.6 Million for Illegal Travel Expenses

A Texas laboratory must pay the federal government more than $10.6 million in travel expenses for which it illegally billed the Medicare program but that didn’t incur, the U.S. District Court for the Southern District of Texas ruled Aug. 21 (United States ex rel. Drummond v. BestCare Lab. Servs. LLC). The court granted partial judgment to the United States in a whistleblower action brought by a competitor of the defendant laboratory under the False Claims Act and the Texas Medicaid Fraud Prevention Act. Under Medicare billing provisions, the court explained, laboratories may bill the United States $1 per mile that their workers travel to collect specimens from patients. The fee covers “the transportation and personnel expenses” for a worker to travel to the patient to collect the sample and return. The amount is based on the number of miles traveled and personnel costs associated with collection. Defendant BestCare Laboratory Services LLC operates a diagnostic laboratory in Webster, Texas, a suburb of Houston, where it tests specimens, primarily from disabled and elderly patients. It took advantage of this Medicare billing provision by sending specimens from its branches in Dallas, San Antonio and El Paso, Texas, to Houston for testing. BestCare’s workers didn’t travel from these cities to Webster with the specimens. They shipped the specimens on flights to Houston for roughly $100 per batch. A different worker from the Webster laboratory retrieved the batches from Houston’s airport. Workers Didn’t Travel Despite the fact that BestCare’s workers didn’t accompany the specimens to Webster, the company billed Medicare as if they had, in one instance billing Medicare $1,500 in travel expenses for a $43 blood test. BestCare also billed for each specimen separately by calculating the maximum number of miles that its worker could theoretically have driven to retrieve them. In reality, the worker retrieved many specimens in a single trip and didn’t travel back to the laboratory after collecting each specimen. The court rejected BestCare’s contention that the rule doesn’t say that the sample has to be conveyed by a person, calling it “an argument that would embarrass a middle-school debater.” BestCare argued that the Medicare third-party contractors—hired by the United States to administer Medicare—approved and paid the claims. “That is true,” the court said. “That they erred does not excuse BestCare’s dishonest predicate to their error. Bad advice from a Medicare contractor does not bind the people of the United States.” The manuals that Medicare contractors gave BestCare stated that it couldn’t bill for these expenses, the court said, and they explained that the travel allowance is intended to cover the “estimated travel cost and technician’s salary associated with collecting the specimen.” A 2007 addition to the manual specifically states that laboratories can’t bill “for miles not actually traveled by the laboratory technician,” the court emphasized. Takeaway: Laboratories cannot bill Medicare for miles that lab technicians did not actually travel. Doing so can result in significant penalties.