Lab that put patients in “immediate jeopardy” had recently passed College of American Pathologists inspection

Marymount Hospital (

Marymount Hospital (

The Milwaukee Journal Sentinel, as part of its ongoing look at laboratory safety and inspection processes, is reporting the Cleveland Clinic hospital lab that was shut down in March 2015 because it placed patients in “immediate jeopardy” had passed a College of American Pathologists (CAP) inspection just three months earlier.

I drew attention to the closure of the Marymount Hospital lab in one of my News Roundups back in September, but not too many details about what the lab did (or did not do, as it were) to necessitate its closure were available at that time.  Fortunately, the Milwaukee Journal Sentinel article fills in a few gaps:

Government regulators found dozens of violations in Marymount Hospital’s lab, including six serious enough to be considered an “immediate jeopardy” to patients, which means the problems are likely to cause serious injury or death.

[Lab workers] used expired chemicals to run tests, failed to calibrate machines, didn’t run quality control checks and had poor procedures in one of the most critical departments of a lab — the blood bank.

Technicians weren’t tracking the temperature of blood being returned to the lab from operating rooms…

The lab wasn’t quickly investigating transfusion reactions, couldn’t find records for patients who had received transfusions, and was using expired products to screen blood for compatibility with patients.

[E]mployees had not been properly trained and weren’t following well-known rules for proficiency testing…

Some employees had not been evaluated on their ability to perform specific tests, and the lab couldn’t provide documentation that they met the educational requirements for their jobs.

Some might be wondering how these deficiencies were discovered if the CAP’s inspection, which the CAP says uses “the most scientifically rigorous customized checklist requirements”, missed them.  The answer is:  Potentially just dumb luck.

Every year, the Centers for Medicare and Medicaid Services (CMS) randomly inspects up to 2% of labs that had recently been inspected by its deemed accreditation agencies to see how well those agencies are doing their jobs. In other words, the inspectors get inspected.  And CMS just happened to choose Marymount this year.

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StrataDx gets new owners

Not long after I published my article about the $560,000 settlement between pathology laboratory StrataDx and the federal government to settle allegations StrataDx provided kickbacks to physicians through client billing arrangements and sham consulting agreements with referring physicians, I received an email from dermatopathologist Dr. Lisa Cohen. Unbeknownst to me, Dr. Cohen, along with dermatopathologist Dr. Terence Harrist, purchased StrataDx from private equity firm Linden Capital … [Continue reading]

Government says StrataDx violated False Claims Act with client billing arrangement


Lexington, Massachusetts-based StrataDx Pathology Laboratory (StrataDx) will pay $558,793 to settle allegations made in a qui tam (whistleblower) lawsuit filed by a former employee that it paid kickbacks to physicians through sham consulting agreements and client billing arrangements. According to the Department of Justice (DOJ) press release, StrataDx, which is owned (at least partially) by private equity firm Linden Capital Partners, admitted it paid consulting fees to two physician … [Continue reading]

OIG releases Medicare Part B laboratory expenditure data for 2014

Top 25 tests

The Office of Inspector General for the Department of Health and Human Services (OIG) released a report on September 29, 2015 on Medicare Part B laboratory expenditures for 2014. The OIG put this report together, which is titled "Medicare Payments for Clinical Laboratory Tests in 2014: Baseline Data", because the Protecting Access to Medicare Act of 2014 (PAMA) on page 58 requires the OIG to: [P]ublicly release an annual analysis of the top 25 laboratory tests by expenditures under … [Continue reading]

Millennium Health close to declaring bankruptcy?

Bloomberg Business recently published an article that says, among other things, embattled urine drug toxicology company Millennium Health (MH) is close to finalizing a deal with its lenders "to restructure the company in bankruptcy court". The Bloomberg article also says the settlement MH is negotiating with the federal government could reach $275 million (as opposed to $250 million as previously reported), and MH is offering to place itself under the control of its creditors.  In … [Continue reading]

CMS releases proposed rule for Clinical Diagnostic Laboratory Tests Payment System

The Centers for Medicare and Medicaid Services (CMS) on Friday evening released its proposed rule for the new Clinical Diagnostic Laboratory Tests Payment System. Background Section 216 (a) of the Protecting Access to Medicare Act of 2014 (PAMA), which was enacted on April 1, 2014, requires "extensive revisions to the Medicare payment, coding, and coverage requirements for [clinical diagnostic laboratory tests]" under section 1833 (h) of the Social Security Act. CMS was supposed to have … [Continue reading]

Pinnacle Laboratory Services files kickback countersuit against American Clinical Solutions

Yussuf Abdel-Aleem

Pinnacle Laboratory Services has filed a countersuit against American Clinical Solutions (ACS) and three of its executives in which it alleges they have: ...devised and undertaken an unlawful “kickback” scheme under which they compete against Pinnacle by offering physicians illegal financial inducements in exchange for referrals of patient specimen for [urine drug testing]... Background ACS filed a lawsuit against Pinnacle in July 2014 in which it alleges Pinnacle engages in an … [Continue reading]

Michael Parry, executive director of the American Registry of Pathology, admits to stealing $2.2 million

Michael Parry, the executive director of the American Registry of Pathology (ARP) and the treasurer of the International Registry of Pathology (IRP), pled guilty on September 17, 2015 to stealing $2.2 million from the ARP via wire fraud and money laundering. The ARP is a non-profit corporation that is not "an agency or establishment of the United States Government".  It was established by Congressional Charter on July 14, 1976, and among other things, it is authorized to: ...enter into … [Continue reading]

Pathology Blawg News Roundup for September 18, 2015

Not a whole lot of news for the Roundup this week... American Board of Anesthesiology kills its MOC recertification exam; Internal Medicine Board may soon follow A reader who wishes to remain anonymous sent me a link to this Medscape article (subscription required) the other day with a short message: Hope for pathology? The article discusses how the American Board of Anesthesiology (ABA) replaced its every-ten-year maintenance of certification (MOC) recertification exam with "an online … [Continue reading]

Appellate court affirms significant narrowing of whistleblower suit against Quest Diagnostics

The Third Circuit Court of Appeals has affirmed the decision of a lower court to significantly narrow the physician kickback allegations against Quest Diagnostics in a whistleblower suit filed by Dr. James Judd. Background Dr. Judd, a family practitioner at Hatboro Medical Associates (HMA) in Hatboro, Pennsylvania, filed his qui tam suit against Quest in 2010.  He alleged Quest violated the Anti-Kickback Statute and Stark Law by inducing HMA and medical practitioners in numerous other … [Continue reading]

Health Diagnostic Laboratory sold for a measly $37.1 million to True Health Diagnostics

True Health Diagnostics

The $37.1 million bid from True Health Diagnostics was the successful bid at the court-supervised auction of Health Diagnostic Laboratory (HDL) last Thursday.  The winning bid was a mere $5.1 million more than True Health's stalking horse bid of $32 million. I still am just amazed at how quickly HDL rose and fell.  Let's take brief look at that timeline: Tonya Mallory founds HDL in July 2009 with a handful of employees By 2010, HDL employs 126 people; this increases to 375 in … [Continue reading]

Pathology Blawg News Roundup for September 10, 2015

True Health Diagnostics $32 million stalking horse bidder for Health Diagnostic Laboratory True Health Diagnostics, a Frisco, Texas-based laboratory that performs "advanced clinical laboratory testing" of "Cardiovascular Diseases, genetic disorders, Diabetes, and other metabolic conditions", has agreed to be the stalking horse bidder for Health Diagnostic Laboratory (HDL) at HDL's auction today. A stalking horse bidder is an entity chosen by the company being auctioned off to enter the … [Continue reading]

Appeals court vacates judgment against Millennium Health in point-of-care urine cup case

The Eleventh Circuit Court of Appeals has vacated the judgment against Millennium Health (MH) in a lawsuit in which Ameritox accused it of violating the Stark Law and federal Anti-Kickback Statute (AKS) by providing free point-of-care urine drug testing (POCT) cups to physicians. As the Eleventh Circuit said in its 45 page decision, this case was "extraordinarily complex", and so I will only provide very broad strokes as to what has transpired over the four years since the case was … [Continue reading]

Pathology Blawg News Roundup for September 4, 2015

PAMA Panel

Clinical Laboratory Reimbursement Panel has inaugural meeting The Medicare Advisory Panel on Clinical Diagnostic Laboratory Tests had its first meeting on August 26, 2015.  Readers will recall this panel was established by the Protecting Access to Medicare Act of 2014 (PAMA) and is charged with, among other things, assisting the Secretary of Health and Human Services in determining how much CMS will pay for tests on the Clinical Laboratory Fee Schedule. From a previous post: Starting … [Continue reading]

Pinnacle Laboratory Services and Select Laboratory Partners resolve lawsuits via mediation

SLP Logo

Pinnacle Laboratory Services, a Florida clinical laboratory that specializes in pharmacogenetic and toxicology drug testing, and Select Laboratory Partners (SLP), a company that "installs turn-key managed clinical laboratories in physician practices", have settled their dueling breach of contract lawsuits with the help of a mediator. Background Pinnacle's Amended Complaint alleged it lost about four months worth of revenue from December 2012 to March 2013 due to SLP's "gross mishandling of … [Continue reading]