Lab Fraud: Will a $256 Million Settlement Stop It?

In fiscal year 2016, Millennium Health (formerly Millennium Laboratories), agreed to pay the Government $256 million to resolve alleged violations of the False Claims Act.  The allegations included medically unnecessary urine, drug and genetic testing and as providing of free items to physicians who agreed to refer expensive laboratory testing business to Millennium in violation of the Anti-Kickback and Stark Law.

Stark Law and the Anti-Kickback Statute were instituted to protect patients from inappropriate medical referrals or recommendations by health care professionals who may be unduly influenced by financial incentives.  Providing free or below-market goods or services to a physician who is a source of referrals, or paying such a physician more than fair market value for his or her services, could constitute illegal remuneration.

The “Stark Statute” prohibits a lab (or other entity providing healthcare items or services) from submitting Medicare claims for payment based on patient referrals from physicians having an improper “financial relationship” (as defined in the statute) with the lab. The improper” financial relationship” could be an ownership, equity or investment interest by a physician.

Two additional examples of violations which are potential areas of abuse with regard to lab testing fraud are unlawful specimen processing payments and unlawful registry payments.

To read more, Nolan Auerbach & White previously discussed this settlement in,  “Are Lab Companies Back to Their Old Tricks of Bundling Medically Unnecessary Tests”.

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