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Volume XII, Number 145

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Not Positive: Last Week’s Lab Fraud Schemes

January 18, 2022. Testing, testing, the DOJ is on top of unnecessary genetic testing schemes. The United States Department of Justice recently settled cases against UC San Diego Health and Boca Toxicology Lab LLC (dba Lab Dynamics) for submitting claims for unnecessary tests to Medicare. Under the terms of the settlement, the academic health system of the University of California, San Diego paid $2.98 million. The owner of Florida-based Boca Toxicology Lab LLC pled guilty to one count of conspiring to commit healthcare fraud in a $6.9 million conspiracy. Given the multiple points of contact involved in healthcare testing, individuals working at providers’ offices and/or lab facilities have the opportunity to blow the whistle on suspected fraudulent activity. Whistleblowers who report healthcare fraud may be entitled to receive 15-25% of the government’s recovery.

Over a period of four years, providers with the academic health system allegedly “ordered and submitted referrals for medically unnecessary genetic testing,” according to court documents. The lab then submitted claims to Medicare for these unnecessary tests, conduct which violates the False Claims Act. As the Acting Assistant Attorney General for the Justice Department’s Civil Division noted, “Hospitals are the gatekeepers for medical care and are expected to ensure that all services performed at their direction, including genetic tests, are medically appropriate.” Such misconduct has the side effect of eroding public trust in hospitals as healthcare institutions.

In the Sunshine State, the owner of a toxicology lab not only submitted medically unnecessary tests for Medicare reimbursement, but also enlisted patient brokers to procure Medicare beneficiary referrals and provider authorizations for testing. Capitalizing on COVID-19 panic, the lab included COVID-19 testing in its battery of unnecessary tests given to Medicare beneficiaries. For one count of conspiring to commit healthcare fraud, the lab owner may serve up to 10 years in prison.

Laboratory tests have their place and purpose in modern medical care. Prior to COVID-19, a hot topic in the healthcare space was how much the more per capita the US spends on healthcare compared to other countries, and a high rate of costly medical testing drives that differential. Most studies find that the US spends more money on healthcare for lower life expectancy than other countries, however.

What kind of care delivery, medical technology, and ultimately life expectancy improvements could occur if fraudsters were not diverting government funds into their own pockets? Various estimates state that as much as 20% of healthcare spending is lost to fraud.

The Department of Justice needs whistleblowers to report fraud involving unnecessary medical testing, as taxpayers should only pay for medical tests that honest providers believe will provide benefit to their patients.

© 2022 by Tycko & Zavareei LLPNational Law Review, Volume XII, Number 18
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About this Author

Jonathan K. Tycko leads the Whistleblower Practice Group of Tycko & Zavareei LLP

In recent years, the laws of the United States have undergone a whistleblower revolution. Federal and state governments now offer substantial monetary awards to individuals who come forward with information about fraud on government programs, tax fraud, securities fraud, and fraud involving the banking industry. Whistleblowers also now have important legal protections, designed to prevent retaliation and blacklisting.

The law firm of Tycko & Zavareei LLP works on the cutting edge of this whistleblower revolution, taking on even the most complex and confidential whistleblower...

202-973-0900
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