Office of the Inspector General says no to laboratory EHR fee kickbacks

OIG HHS

The Office of the Inspector General (OIG) for the Department of Health and Human Services was recently asked to assess whether a business arrangement between a clinical laboratory, an electronic health record vendor (EHR) and referring physicians violates the federal anti-kickback statute.

Some of you may be thinking “Wait, I thought laboratories could no longer provide kickbacks with EHRs as of January 1, 2014.”

That is correct insomuch as labs can no longer donate an EHR to referring physicians, clinics, etc.  But the question before the OIG was whether a laboratory can legally pay EHR fees that would normally be incurred by referring physicians.

To help explain this issue, I once again asked Mr. Lee Dilworth, Chief Legal and Administrative Officer of American Pathology Partners, to summarize the OIG’s Opinion.

And just as with an earlier OIG Advisory Opinion, Mr. Dilworth readily agreed to help and put together a very nice summary, which is below.

Many thanks to Mr. Dilworth for taking the time to do this.


 

On April 8, 2014, the OIG posted Advisory Opinion 14-03 which should be of interest to any pathology lab receiving test orders and transmitting test results via electronic interfaces with clients.  EHR and interface vendors should also be interested.

Here, the OIG found that the payment arrangement for an interface involved “potentially problematic financial incentives” presenting “more than a minimal risk” of fraud and abuse under the Federal anti-kickback statute (AKS).  Readers should note that the AKS is a federal criminal statute that subjects both parties involved to potential hefty fines, imprisonment and exclusion from Medicare and Medicaid.

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Husband may get another chance to prove LabCorp pap smear negligence

(examiner.com)

(examiner.com)

Timothy Lavelle, the husband of a woman who died of cervical cancer in 2008, may get another chance to prove a LabCorp cytotechnologist was negligent in missing abnormal cells on his wife’s 2006 pap smear, according to the Georgia Court of Appeals.

The case was before the appellate court because the trial court granted (in part) the motions LabCorp filed during the discovery period to prevent three expert witnesses from testifying and for summary judgement (ending the case in LabCorp’s favor).

In his appeal, Mr. Lavelle took issue with three rulings from the trial court:

  1. The denial of a motion to compel further deposition of a witness;
  2. The grant of a motion excluding the testimony of an expert witness; and
  3. The grant of partial summary judgment in favor of LabCorp on the issue of breach of the standard of care.

Witness deposition

In 2011, Lavelle deposed the LabCorp cytotechnologist alleged to have been negligent with his wife’s pap smear.  Of note, in 2006, the cytotech reviewed 140 slides per day that were initially screened by a computer that would flag 22 fields for the cytotech to review.

During the deposition, Lavelle showed the cytotech photographs and quizzed her about whether the cells were atypical or not.  The LabCorp attorney objected and told the cytotech to not answer the questions.

LabCorp objected because in real life the cytotech did not screen slides using photomicrographs, which make the cells appear different when viewed through a microscope. In addition, LabCorp argued there was no way to prove the cells she was being shown were the same ones the computer flagged back in 2006, and that the cytotech now had hindsight bias.

Lavelle asked the court to compel the cytotech to answer his questions, but for the reasons mentioned above, the court ruled no further deposition would be permitted.

The appellate court upheld the trial court’s ruling on this matter, citing the cytotech’s hindsight bias as well as the “significant differences between the witness’s original review of the slide and the review which Lavelle sought to elicit on her deposition.”

Expert Witness

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Uropathology laboratory LabMD files suit against Federal Trade Commission

FTC building

Uropathology laboratory LabMD, which was forced to suspend operations in January 2014, has filed suit against the Federal Trade Commission (FTC), stating the agency has abused its power in the manner with which it has handled the data breach action the FTC brought against LabMD.

LabMD’s complaint

There is quite a bit of information in the 43 page complaint, which readers can refer to if interested, but the following represents a very brief summary of pertinent points within the complaint.

In 2008, a company called Tiversa obtained a LabMD computer file with the protected health information (PHI) of more than 9,000 patients from a peer-to-peer file sharing program.

Tiversa is:

a self-described “cyber-intelligence company” specializing in searching for and copying medical, financial, and other sensitive files on peer-to-peer networks using patented technology

Tiversa then told LabMD it had obtained the PHI but refused to provide any further information “unless LabMD entered into a contract for Internet security services” with Tiversa.  LabMD refused.

Tiversa then allegedly turned LabMD’s PHI over to the FTC, after which the FTC launched a full-scale investigation into LabMD’s data security practices and pronounced the data breach was the result of inadequate data security practices.

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Two more docs plead guilty to accepting laboratory bribes/kickbacks

Scales of Justice

Two more physicians are potentially going to jail related to laboratory kickbacks and bribes.  Internist Dr. Charles Goldberg became the 12th physician to plead guilty to accepting bribes from Biodiagnostic Laboratory Services (BLS) in exchange for test referrals.  In a separate scheme, Dr. Linda Rosenberg pled guilty to accepting kickbacks from a Chicago-area laboratory.

Dr. Charles Goldberg

I first wrote about the BLS bribery case back in April 2013 when it came to light.  Basically, BLS paid physicians thousands of dollars a month to refer testing to BLS “under the guise of lease, service, and/or consulting agreements.”

One physician, Dr. Frank Santangelo, pled guilty in July 2013 to receiving $1.8 million in bribes in the form of $40,000-$50,000 monthly payments.  He was supposed to have been sentenced on October 24, 2013, but I can find no record of his sentence, so I presume sentencing has been delayed.

The entire scheme is said to have resulted in approximately $200 million in revenue for BLS over a 6 year period, $33 million of which went to BLS’ then 39 year old owner David Nicoll.

Disappointingly, only $7 million of the $200 million has been recovered so far.

In order to secure Dr. Goldberg’s test referrals, BLS “leased” the waiting room, bathroom, and one examination room in his office for $1,800 a month.

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Judge denies Ameritox sanctions motion against Millennium Laboratories

ML logoAmeritoxA judge has denied the motion for terminating sanctions filed by Ameritox that alleged senior Millennium Laboratories (ML) executives destroyed evidence related to an ongoing lawsuit.

Background

The suit, which was originally filed in 2011, alleges ML engaged in false advertising, tortious interference, violations of the Stark Law and Anti-Kickback Statute, and performance of unnecessary tests, among other things.

It took a detour in December 2013 when Ameritox accused ML president Howard Appel and EVP of Sales Elizabeth Peacock of “destroying evidence and improperly concealing relevant evidence through improper document redaction.”

Ameritox claimed ML’s actions “irreparably harmed” its case against ML, and asked the court to find in favor of Ameritox in the underlying dispute, award it (Ameritox) attorney’s fees, and compel ML to pay for a special investigator to determine the full extent of ML’s “destruction and concealment of evidence.”

ML fired back the following month and denied the allegations, claiming Ameritox advanced them in a “last-gasp attempt to avoid litigating the merits of its groundless claims.”

Motion denied

The hearing on Ameritox’s motion was held on February 4, 2014, and the judge denied the motion on February 26, 2014.

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Class action suit against pathologist Dr. Rajgopal Menon will proceed

Dr. Rajgopal Menon (CBC)

Dr. Rajgopal Menon (CBC)

The Court of Appeal of New Brunswick Canada has ruled a class action suit against pathologist Dr. Rajgopal Menon will proceed, reversing a decision by a lower court.

Very briefly, Dr. Menon was a pathologist at Miramichi Regional Hospital from at least January 1995 to February 2007, when he was suspended after “complaints about incomplete diagnoses and delayed lab results.”  I do not know what Dr. Menon has been doing since then.

Around the time of his suspension, an audit of 227 of Dr. Menon’s breast and prostate cases found that 18% (41 cases) were “incomplete” and 3% (7 cases) were misdiagnosed.  Unfortunately, it is not clear how exactly the cases were incomplete, or whether the misdiagnoses represented a change from benign to malignant, malignant to benign, etc.

The results of that audit eventually led to a much larger review of 23,000 cases, which found a “complete or partial change in the results in about a quarter of the cases.”  Again, no more information is available than that.

Dr. Menon told the Canadian Broadcasting Corporation in 2008 that he has “practically zero” responsibility for the errors, which he says were due solely to “volume-related” issues.

The CEO of Miramichi Hospital who hired Dr. Menon told an inquiry panel in 2008 (before the 23,000 case review) that he was “borderline desperate” to find a pathologist when he hired Dr. Menon and reportedly only checked his references “in passing”.

Interestingly, the CEO in question, John Tucker, left his job in 2002 after he was convicted of 17 counts of fraud and breach of trust.

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Forensic pathologist Dr. Evan Matshes files $30 million defamation lawsuit

Dr. Evan Matshes (OMI)

Dr. Evan Matshes (OMI)

Dr. Evan Matshes, Director of Pediatric Forensic Pathology and Associate Medical Investigator at the Office of the Medical Investigator in Albuquerque New Mexico, has filed a $30 million lawsuit against the chief medical examiner in Calgary and other government officials, claiming they defamed him and ruined his career.

I tried to find Dr. Matshes’ complaint online, but was unable to do so, so all I have to go on is what is contained within various news reports.

The lawsuit appears to stem from an investigation of Dr. Matshes’ work at the Calgary medical examiner’s office which began in February 2012.

According to the Calgary Herald, an internal probe was initiated after an insurance company raised questions about an accidental death ruling in one of Dr. Matshes’ cases.  The probe reportedly uncovered issues in four other non-criminal cases, at which time fourteen of Dr. Matshes’ cases were sent to a panel of forensic pathologists in the United States for review.

Interestingly, news of the investigation into Dr. Matshes’ work first appeared in a story that was predominantly about Dr. Michael Belenky, another pathologist in the Calgary medical examiner’s office.

Dr. Belenky at the time was the defendant in a $2 million lawsuit filed by a family who accused him of mistakenly ruling the accidental death of their two year old child a homicide.  The homicide ruling led to the deceased child’s stepbrother being taken away from the family and placed in foster care for two years.

The panel that reviewed Dr. Matshes’ work found his conclusions were “unreasonable” in 13 of the 14 cases.  The province publicly released the panel’s findings in November 2012 literally one hour after it informed Matshes of the results.

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Dr. Stephen Cina turning Cook County Medical Examiner’s office around

Stephen Cina, MD

Stephen Cina, MD

Dr. Stephen Cina, the chief medical examiner in Cook County Illinois since July 2012, has apparently made significant progress in turning the office around.

The Cook County ME office suffered a black eye about two years ago when employees began complaining to journalists about the working conditions in the office.

Specifically, the cooler that was designed to hold under 300 bodies reportedly contained 400 adults and 100 babies, some of which were literally stacked on top of one another.

It was apparently not possible to keep that many bodies cool, and an unpleasant odor that one employee referred to as a “stench”, wafted through the office as the bodies decomposed.

One of the reasons the bodies literally began piling up is because the office at the time was no longer being provided with “burial boxes” in which the remains of unclaimed persons and those whose families could not afford a funeral were placed for burial in anonymous graves in a potter’s field.

Why was the office no longer receiving the burial boxes?  Because the office had stopped paying for them.

Go figure.

In addition, it looked as though the office was severely understaffed, at least from a forensic pathologist perspective.

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Monopoly lawsuit against Quest Diagnostics, insurers significantly narrowed

(Star-Ledger)

(Star-Ledger)

A US District judge has dismissed with prejudice all but two causes of action originally brought against Quest Diagnostics, AetnaBlue Cross/Blue Shield Association and Blue Shield of California by Rheumatology Diagnostics LaboratoryPacific Breast Pathology Medical CorporationHunter Laboratories and Surgical Pathology Associates.

I discussed the allegations at length in this post and this one, but very briefly, the plaintiffs alleged the defendants were involved in a conspiracy to monopolize diagnostic laboratory testing and restrain competition in California.

The following eight causes of action were originally filed back in November 2012.  The third cause of action applies to Quest only; the rest apply to all defendants.

(1) Violation of California’s Cartwright Act, (2) Violation of California’s Unfair Competition Law, (3) Violation of California’s Unfair Practices Act, (4) Intentional and (5) Negligent interference with prospective economic advantage, (6) Monopolization or attempted monopolization in violation of section two of the Sherman Act, (7) Bilateral conspiracies to restrain trade and monopolize in violation of section one of the Sherman Act, and (8) Bilateral conspiracies to monopolize and attempt to monopolize, in violation of section two of the Sherman Act.

The defendants filed a motion to dismiss the original complaint, and in late June 2013, a federal judge threw the entire case out, but gave the plaintiffs 45 days to file an amended complaint.

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Clinical laboratory PremierTox settles health care fraud allegations

DOJ

Drs. Bryan Wood and Robin Peavler, the physician owners of a chain of addiction treatment centers called SelfRefind, as well as PremierTox, a clinical laboratory that performs urine drug screen testing, have agreed to pay $15.75 million plus interest to resolve False Claims Act violation allegations.

According to the settlement agreement, patients at SelfRefind were required to submit to urine drug screen testing, sometimes as often as every two weeks.  The urine was screened at SelfRefind, but was not automatically sent to an outside lab for confirmatory testing.

That reportedly changed in December 2010, when Drs. Wood and Peavler each purchased a 20% stake in PremierTox.  The government claimed after Drs. Wood and Peavler took a financial interest in PremierTox, SelfRefind began “automatically” sending all urine drug screens to PremierTox for confirmatory testing.

The government noted the sheer volume of urine samples that were sent to PremierTox after Drs. Wood and Peavler took an ownership interest simply overwhelmed the laboratory.  As a result, the lab kept samples frozen in a storage unit for months before it could test them.

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