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Unnecessary Drug and Genetic Tests the Theme in Recent Enforcement Actions

Most healthcare-related enforcement actions from July and August involved urine drug tests and genetic testing.

In major enforcement actions announced in July and early August that involved the healthcare industry, the majority of cases dealt with unnecessary genetic or urine drug testing. Here’s a summary of 13 of the cases that stood out most:

July 7: A West Virginia Hospital, Weirton Medical Center, agreed to pay $1.5 million to settle False Claims Act allegations that it violated the Stark Law by paying referring physicians more than fair market value or making payments based on volume of referrals, then billing those payments to Medicare. The settlement was the result of a voluntary self-disclosure from the hospital about potential Stark Law violations.

July 7: The medical director of two addiction treatment facilities was sentenced to 54 months in prison for a $112 million fraud scheme that involved billing for substance abuse services that were either medically unnecessary or never provided. According to the U.S. Department of Justice (DOJ), Jose Santeiro, medical director of Second Chance Detox LLC, dba Compass Detox and WAR Network LLC, worked with others to admit patients for the facilities’ most expensive treatment, with patient recruiters offering kickbacks to encourage patients to attend the facilities’ programs, then giving those patients illegal drugs so they could be admitted for treatment at Second Chance Detox. Santeiro also billed for excessive, unnecessary drug tests that were never used in that treatment, the DOJ states.

July 12: The US filed a civil complaint against Fresenius Vascular Care, Inc., in federal court in Brooklyn relating to unnecessary and potentially harmful procedures the company allegedly performed on dialysis patients at nine centers across Long Island and New York City. These procedures were then allegedly billed to various federal healthcare programs to increase the company’s revenue.

July 14: A Connecticut doctor pleaded guilty to one count of conspiracy to commit healthcare fraud and one count of conspiracy to receive kickbacks of $100 to $125 per referral of unnecessary brain scans to his medical diagnostic company based on false patient diagnoses. He now faces total penalties of up to 15 years in prison and $500,000 in fines.

July 20: The DOJ announced a National Health Care Fraud Enforcement Action across 13 jurisdictions, resulting in charges against 36 individuals involved in telehealth fraud schemes involving lab testing and other medical services generating over $1.2 billion in Medicare claims.

July 22: Metric Lab Services LLC, Metric Management Services LLC, and Spectrum Diagnostic Labs LLC, and their respective owners paid $5.7 million to settle claims of falsely billing Medicare for unnecessary genetic testing and then paying marketers a share of the reimbursement.

July 22: Oregon-based medical device manufacturer Biotronik Inc. agreed to shell out $12.95 million, $2.1 million of which will go to the two employees who brought the original qui tam lawsuit, to settle allegations of paying kickbacks to doctors in exchange for their use of the company’s “implantable cardiac devices,” including defibrillators and pacemakers.

July 29: Pennsylvania skilled nursing facility Old Man’s Home of Philadelphia d/b/a Saunders House agreed to pay $819,640 to settle false billing charges in a whistleblower case for providing medically unnecessary rehab services that didn’t prioritize patients’ “clinical needs.”

August 1: The New York Attorney General charged America’s Imaging Center, Inc. and its owner with paying kickbacks to physicians in exchange for referring patients for medically unnecessary radiological tests and procedures subsequently billed to Medicaid.

August 5: Maryland-based pain management group Gonzaga Interventional Pain Management, its physician owner, and the owner’s son/CEO agreed to pay $980,000 to settle allegations of using blanket orders to automatically perform and bill Medicare for medically unnecessary urine drug tests (UDTs)—specifically, definitive tests performed on all patients regardless of the results of their presumptive tests. 

August 5: A Nashville federal grand jury indicted eight people for their role in a scam perpetrated by Crestar Labs in which marketers signed phony contracts and were paid kickbacks to target elderly beneficiaries of federal healthcare programs at senior health fairs, nursing homes, and other locations for their genetic material and urine analysis samples. Those samples were then used for genetic testing ordered by doctors receiving kickbacks, most of whom never even saw the patients.

August 9: A federal grand jury indicted two Pennsylvania-based skilled nursing facilities—Mt. Lebanon Rehabilitation and Wellness Center and Brighton Rehabilitation and Wellness Center—and five individuals for providing fake staffing records to the Pennsylvania Department of Health “during federally mandated surveys” and making false statements relating to resident assessments to increase Medicaid and Medicare reimbursements.

August 9: A federal judge sentenced a nurse practitioner from Georgia to 87 months in prison and a $1.6 million fine for her role in a telehealth kickback scheme involving over $3 million in charges to Medicare for medically unnecessary orthotic braces ordered “for patients [the nurse] never examined or spoke to.”