Beyond COVID-19

The 6 Hottest Lab Compliance Stories That Almost Nobody Is Paying Attention To

If not burnout, you may be suffering from a case of COVID-19 fatigue right now. And you’re not alone. The monster virus has seemingly consumed everything in its path over the past six months, including the world’s attention. While completely understandable, the current fixation on COVID-19 belies the fact that there are other important developments taking place that may directly affect your lab. So, as we move into the second half of 2020, let’s step back and recognize the year’s biggest non-COVID-19 stories in lab compliance that have flown under the radar due to the pandemic.

  1. The Continuing Crackdown on Urine Drug Testing

Before the pandemic, the opioid crisis was the primary driver of health care fraud and abuse enforcement activity. COVID-19 has done little to alleviate either the opioid problem or level of pressure enforcers are exerting against labs and other providers involved in opioid-related testing scams, most of them for billing Medicare and Medicaid for medically unnecessary drug tests. Since April 24, there have been at least five high profile settlements or convictions announced, as summarized by the Scorecard below:

Scorecard: Recent Medically Unnecessary Drug Testing Enforcement Actions

Status of Case Accusations
Operators of American Toxicology Labs (Virginia) plead guilty to fraud + await sentencing Excluded provider opens and runs a lab that generates $8.5 million in billings for urine screens for entities representing themselves to be opioid treatment facilities
Co-founder of Liberation Way drug and alcohol rehab clinic in Pennsylvania sentenced to 37 months’ prison + $3.1 million in restitution for health fraud conspiracy* Defendant ran an overbilling and elaborate kickback scheme involving thousands of medically unnecessary urine tests sent to Florida-based labs for analysis
Physician owner of Seattle Pain Center + Northwest Analytics testing lab pays $2.85 million to settle false claims charges Clinics required all patients to undergo urine drug screening, generating thousands of medically unnecessary tests performed by the lab and then billed to Medicare + Medicaid
Connecticut Counseling Centers pays $295K to settle claims of overbilling Medicaid for outpatient substance abuse services Methadone clinic billed Medicaid for urine drug tests even though reimbursement for those services were included as part of its bundled weekly payment rate
Logan Laboratories and Tampa Pain Relief Centers, Inc. + two executives pay $535,449 to settle claims of falsely billing Medicaid for medically unnecessary urine drug tests Defendants automatically ordered both presumptive and definitive urine drug testing for all patients at every visit, without having a physician determine that the testing was medically necessary for those particular patients
Lab owner sentenced

*Owner of Florida lab separately sentenced to 15 months’ prison and $3.4 million in restitution for his part in scheme

  1. The Continuing Crackdown on Genetic Testing Consumer Scams

Consumer scams involving genetic testing labs (CGx) continue to represent perhaps the fastest-growing segment of the federal enforcement industry, probably because they target the most vulnerable. Far from slowing the momentum, the pandemic is actually fueling the scammers by creating new opportunities for SARS-CoV-2 testing schemes.

Under the typical modus operandi, “recruiters” contact Medicare beneficiaries online, on the phone or face-to-face at health fairs, senior centers, low-income housing areas or religious institutions like churches and synagogues promising free genetic testing to determine the individual’s cancer risks and how they’d respond to certain drugs in exchange for a cheek swab, personal Medicare information and a copy of their driver’s license. Next, the scammers contact the beneficiaries’ doctors and ask them to order the tests in return for a cut of the Medicare payment. Even if the doctor refuses, the scammers can count on the cadre of doctors they’ve lined up who are willing to prescribe the tests without seeing or making a determination of whether those tests are medically necessary.

The enforcement momentum that began in 2019 with the nationwide “Operation Double Helix” takedown has continued into 2020. Consider the following cases, all of which came down since June:

  • July 9: Pennsylvania U.S. Attorney indicts seven people for role in massive CGx scam in which physicians were paid kickbacks of $5,000 to order more than $2 million worth of medically unnecessary CGx tests;
  • July 1: California-based molecular testing firm Agendia, Inc. pays $8.25 million to settle charges of running a nationwide scheme to falsely bill Medicare for its flagship MammaPrint genetic test for predicting breast cancer recurrence risk;
  • June 5: The operator of recruiting firm Privy Health Inc. pled guilty to conspiring with a Florida lab network and ordering physician to bill Medicare for nearly $5 million in CGx tests without regard to medical necessity and will be sentenced in October; and
  • June 3: Owners of labs in Texas and Mississippi admitted their roles in a scheme to pay kickbacks in exchange for referrals of patient DNA samples for genetic testing and are awaiting sentencing.
  1. Labs Get Some PAMA Relief for 2021

For labs, the headline of the $2 trillion federal COVID-19 relief bill, aka, CARES (Coronavirus Aid, Relief and Economic Security Act), was free coronavirus testing for patients without adequate financial assistance for the testing lab. What went largely unnoticed in the legislation was the relief it provides on PAMA Medicare Part B lab test price cuts. Explanation: The original plan was for the reduction cap, i.e., maximum amount by which CMS could reimburse for Medicare Part B lab tests, was scheduled to rise to 15% in 2021. But CARES puts the cap rise and resulting reimbursement cuts on hold for one year. And given how the political tide had been turning in the lab industry’s favor before the COVID-19 crisis, that extra year may prove extremely valuable down the road.

  1. New DOJ Guidance on Self-Disclosure

As the year began, the DOJ issued new guidance on how labs and other providers who discover internal False Claim Act (FCA) violations have occurred within their organization can come forward, confess and ensure maximum leniency from regulators. More precisely, the new Justice Manual guidance outlines clear criteria and specific examples of actions they can take to earn credit for:

  • Voluntary disclosure of FCA violations;
  • Cooperating with the investigation; and
  • Implementing remedial measures to correct and prevent recurrence of identified problems.
  1. FDA Issues Guidance on Oncology Drug CDx Labeling

In April, the FDA issued new guidance on an important issue it has been historically reluctant to address: labeling of companion diagnostics (CDx) for personalized cancer therapies. Specifically, the guidance explains how CDx developers can broaden the indication for a test so that it references a group of similar drugs rather than a specific treatment. In addition to providing oncologists greater flexibility, the agency acknowledges that labeling companion tests more broadly would reduce the regulatory burden for labs and enhance the utility of the test.

Test developers will need hard evidence to support broader labeling; simply matching diagnostic and therapeutic targets won’t be enough, according to the guidance. “Different diagnostics for the same target may utilize different cut-offs, filters, or other design features that impact the patient populations they identify and, consequently, the likelihood of a biomarker-positive patient to respond to a given therapy,” the agency notes. “Any potential differences should be evaluated to ensure it is clinically appropriate to take a broader labeling approach.”

  1. Surge in Healthcare Worker Fatalities

One of the most overlooked consequences of the pandemic has been the exponential increase in fatalities and catastrophic injuries among healthcare workers. According to an analysis from Modern Healthcare, of the 202 workplace investigations performed by federal and state OSHA at hospitals, nursing homes, doctors’ offices, home health agencies and rehabilitation centers in April 2020, more than 130 were for a fatality or catastrophic injury, up more than 4,300%(!) from April 2019 when only three out of 117 investigations involved a fatality or catastrophe.

While the investigation reports don’t specify the cause, labor attorneys interviewed by Modern Healthcare suggest that COVID-19 is almost surely the cause of this alarming spike. In addition to taking down healthcare workers, the virus is wreaking havoc on maintenance and other workers who work at health facilities.


There’s more to lab compliance than COVID-19. Pre-existing enforcement trends like the crackdown on urine drug and CDx testing have not only continued but also gained momentum during the pandemic. In addition, pandemic politics, economics and working conditions are having significant impacts, some positive but most negative, that have largely gone unrecognized.


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