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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Horizon BCBS sues Avee Laboratories, others for urine drug testing fraud

Avee

Horizon Blue Cross Blue Shield of New Jersey is suing Avee Laboratories, Alere Toxicology, Laurie Deerfield, DO, and Leading Edge Recovery Center, a substance abuse treatment center, for $36 million in damages and penalties related to the submission of false and fraudulent claims for urine toxicology testing.

Horizon’s Allegations against Avee, Leading Edge and Dr. Deerfield

Horizon claims Avee used false and deceptive marketing materials and offered illegal inducements to convince health care providers to perform medically unnecessary point of care urine toxicology tests (POCT) and then send the samples to Avee for unnecessary confirmatory testing.

Horizon alleges Leading Edge Recovery Center and Dr. Deerfield, Leading Edge’s medical director, performed medically unnecessary POCT and confirmatory testing.  Even though patients had multiple negative POCT tests, Horizon says Dr. Deerfield and Leading Edge ordered confirmatory testing despite the fact they had no reason to believe the POCT were inaccurate.

Alee apparently had providers use “Custom Test Panel” order forms that enabled the providers to simply check a box that authorized Avee to perform multiple unnecessary tests on a single urine sample.  Many of these forms lacked a provider signature, according to Horizon.

The complaint goes on to claim Avee also told providers confirmatory testing of POCT was required by CLIA when it is not and waived patient co-pays so patients would not object to testing.

Financial Impact

Since 2009, Horizon states it paid Avee Labs and health care providers more than $24 million and $12 million, respectively.

As a result of the aforementioned tactics, Horizon says some providers increased their POCT claims by as much as 5,000% between 2009 and 2013.

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President of Biodiagnostic Laboratory Services pleads guilty to federal charges

Police removing evidence at BLS (Michael Karas/The Record)

Police removing evidence from BLS (Michael Karas/The Record)

The wheels of justice actually spun quickly this time.  David Nicoll, president of New Jersey-based Biodiagnostic Laboratory Services (BLS), his brother Scott Nicoll, and five others pled guilty on June 10, 2013 to conspiracy to violate the Anti-Kickback Statute and the Federal Travel Act, and money laundering.  They each face up to five years in prison and a $250,000 fine for the conspiracy count and twenty years in prison and a $500,000 fine for the money laundering charge.

I first wrote about this case in April when it was announced David Nicoll, along with his brother and cousin, were arrested for health care fraud and paying kickbacks to referring clinicians.

At the time, the FBI stated BLS’ business model led to over $200 million in revenue over a six year period for BLS, approximately $33 million of which went to David Nicoll.  He used that money to spend over $5 million on cars, $400,000 on sports tickets and $154,000 at a gentlemen’s club.

Then, a little less than a month later, it was reported two former sales reps for BLS had pled guilty to conspiring to bribe physicians.  They each face up to five years in prison when they are sentenced in September.

In addition to the prison time and fines mentioned above, David and Scott Nicoll agreed to return $50 and $25 million, respectively, to the government.  The other five who also pled guilty will return between $800K and $1.3 million.

Prison sentences will be announced on September 11, 2013.

Charges are still pending against Dr. Frank Santangelo, the internist alleged to have accepted $700K in kickbacks for $4.2 million in laboratory referrals to BLS.

Two Biodiagnostic Laboratory Services sales reps plead guilty to bribery conspiracy

US Attorney Paul Fishman

US Attorney Paul Fishman

Just yesterday it was announced Peter Breihof and William Dailey, two former sales representatives for Biodiagnostic Laboratory Services (BLS) in Parsippany, NJ, pled guilty to conspiring to bribe physicians to send lab work to BLS, according to US Attorney Paul Fishman.

Readers will recall I wrote about BLS a few weeks ago when the FBI announced it had arrested David Nicoll, part owner and president of BLS, his brother and his cousin for defrauding Medicare and several private insurers of tens of millions of dollars through a physician bribery and kickback scheme.

The FBI also arrested Dr. Frank Santangelo, a local internist, for allegedly accepting $700,000 in kickbacks from BLS in exchange for referring $4.2 million of lab work.

The FBI alleges the scheme started in 2006 and went through 2012.  During that time, BLS is reported to have generated over $200 million in revenue, $33 million of which went to Mr. Nicoll, now 39.

Please see the earlier post for more details of the alleged bribery and kickback scheme and how Mr. Nicoll spent some of his money.

In addition to “using phony lease and service agreements to bribe physicians to send their patients’ blood samples to BLS”, Breihof and Dailey admitted they paid referring physicians on a per test basis, so as to incentivize physicians to order a larger number of tests than they normally would have, according to the US Attorney’s office.

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Owner of Wilkesboro Clinical Lab pleads guilty to health care fraud, tax evasion, Stark violation

gavelLouis Francis Curte, the former owner of Wilkesboro Clinical Laboratory (WCL) in North Carolina, has pled guilty to four counts of health care fraud and one count of filing a false tax return.  Mr. Curte also settled separate Stark Law violation allegations with the US Attorney’s Office.

Mr. Curte arranged with another laboratory to culture microbiology specimens, and if the cultures were positive, the lab would subsequently perform identification and antibiotic sensitivity testing.  Mr. Curte apparently billed Medicare for identification and sensitivity testing that was never performed and would bill for the additional tests even if the culture was negative.  The value of these fraudulent billings is between $10,000-30,000.

Additionally, Mr. Curte had a business arrangement with a physician identified only as Dr. T.M., who owned a medical billing company.  This billing company provided the billing services for WCL and was compensated on a “per claim” basis.  Dr. T.M. also reportedly sent blood and tissue specimens to WCL for analysis.

The Stark Law states a medical provider may not bill Medicare or Medicaid for services referred by a physician with a financial relationship with the medical provider.  A compensation arrangement “…based on the volume of the physician’s referrals or the revenue realized through those referrals” is also prohibited.

Mr. Curte apparently recognized the relationship was improper, as the FBI states he submitted false tax records in order to hide the relationship with Dr. T.M. between 2007-2010.  In these false tax statements, Mr. Curte understated his gross income, thereby lowering his tax burden.  This loss of federal tax revenue is estimated somewhere between $30,000-50,000.

Mr. Curte settled the Stark Law violation for $300,000, which includes reimbursement for all improper Medicare payments and civil penalties.

He also agreed to full restitution to Medicare for the improper billings and the IRS for unpaid taxes and faces:

a maximum term of 10 years in prison and a $250,000 fine for the health care fraud charges and a maximum term of three years in prison and a $250,000 fine for the tax fraud charge.

A sentencing hearing has not yet been set.

Commentary

I am curious as to why some health care providers can perpetrate tens and even hundreds of millions of dollars in fraud before they are caught and Mr. Curte’s activities were identified after only $100,000 or so.  What was so different about his case?

And I am again left to wonder why some people are willing to risk going to jail for such a relatively minuscule amount of money.

On a final note, Mr. Curte sold WCL to LabCorp in mid 2011 for an undisclosed sum.

Bio-Reference Laboratories sued by former phlebotomist

Bio-Reference Laboratories (city-data.com)

Bio-Reference Laboratories (city-data.com)

Valerie Greco, a phlebotomist who used to work for Bio-Reference Laboratories (BRL), has filed a lawsuit claiming she was wrongly fired from BRL after she questioned the business practices she witnessed at the internal medicine practice at which she was stationed.  The lawsuit also raises concerns of Medicare fraud and violations of the Anti-Kickback Statute (AKS).

Many thanks to a reader who wishes to remain anonymous for alerting me to both this case and BRL’s subsequent press release.  The following is a summary of the contents of Greco’s complaint.

Greco was assigned as a phlebotomist to draw blood at Fair Haven Internal Medicine (FH) in New Jersey; the blood she drew was to be sent to BRL for analysis.  Instead, FH employees actually drew the patient’s blood and Greco merely processed paperwork on a computer that BRL gave to FH.

Greco noted FH would charge both Medicare and non-Medicare patients for an office visit when in fact the patient was only having phlebotomy, and on top of that, would charge a separate phlebotomy fee.  In addition, BRL would also charge a phlebotomy fee, even though it was FH employees who performed the phlebotomy.

At this point I should note Greco, in addition to being a trained phlebotomist, is also certified as an Electronic Health Records Specialist, Billing and Coding Specialist and a Medical Administrative Assistant, which is likely how she recognized the billing irregularities she alleges.

Greco reported her concerns, via telephone, to her phlebotomy supervisor and a sales rep at BRL.  The sales rep apparently told her to keep her mouth shut, continue the current billing practices and that what FH did was its own business.  Greco apparently made multiple complaints to these same two BRL employees.

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Biodiagnostic Laboratory Services president arrested for health care fraud, kickbacks

Police removing evidence at BLS (Michael Karas/The Record)

Police removing evidence from BLS (Michael Karas/The Record)

David Nicoll, part owner and president of Biodiagnostic Laboratory Services (BLS) in New Jersey, has been arrested along with his brother and cousin on charges of defrauding Medicare and private insurers of at least tens of millions of dollars.  A New Jersey internist, Dr. Frank Santangelo, was also arrested for allegedly receiving $700,000 in kickbacks for his referral of $4.2 million worth of laboratory studies to BLS.

The arrests followed a years-long investigation into BLS and its dealings by federal and other law enforcement authorities, including the Postal Service.

The alleged scheme involved BLS paying “numerous” doctors to refer specimens to BLS in exchange for often thousands of dollars a month “under the guise of lease, service, and/or consulting agreements.”  Basically, BLS supposedly would “lease” space in doctor’s offices that the lab did not need or use.  One doctor received $2,200 per month for leasing 100 sq ft of office space.  At least one other physician was paid $1,500 per month to fill out a one page questionnaire each month that required less than two minutes to complete.

According to a conversation via text message between Dr. Santangelo and David Nicoll highlighted in the complaint, Dr. Santangelo may have been receiving $40-50,000 per month for his referrals.

In addition to providing the specimens, referring physicians are also accused of providing erroneous diagnostic codes to justify unnecessary lab testing, which could remain in patient’s records for the rest of their lives, and could possibly lead to future misdiagnoses.

Over the course of the alleged conspiracy (2006-2012), BLS is thought to have generated over $200 million in revenue, $33 million of which went to its now 39 year old president, David Nicoll.

According to the FBI, Mr. Nicoll spent:

…more than $5 million on high-end and collectible automobiles, including approximately $580,000 for a Yenko Nova and approximately $365,000 for a Yenko Chevelle, approximately $300,000 for a Ferrari, and approximately $291,000 for a Corvette; more than $700,000 to purchase a Manhattan apartment for a female companion; $600,000 on private jet charters; $392,000 on tickets to sporting events; $216,000 at electronics stores; and $154,000 at a gentleman’s club and restaurant.

All four men were released on bail:  $1 million for Mr. Nicoll, $500K for his brother and $250K for his cousin and Dr. Santangelo.

Yenko Nova

Yenko Nova

Yenko Chevelle

Yenko Chevelle

Obviously I know what a Ferrari is, but I had never heard of Yenko automobiles, so I looked them up and basically, Yenko was a custom muscle car shop in Pennsylvania in the 60′s and 70′s.  I guess some people like them, but to me, not worth $300K+.  And definitely not worth risking going to jail for.

I often wonder if lavish spending leads to fraud or vice versa.

Andrew Baker: Federal government needs to stop Quest Diagnostics and LabCorp scam

Andrew Baker

Andrew Baker

Andrew Baker, the former CEO of Unilab and current CEO of Huntingdon Life Sciences, has written an article for The Huffington Post in which he states the federal government needs to stop Quest Diagnostics and LabCorp from continuing to “scam” the Medicare and Medicaid programs of billions of dollars.

You will recall Mr. Baker filed qui tam (whistleblower) lawsuits against Quest in 2005 and LabCorp in 2007, alleging they violated the federal False Claims Act and Anti-Kickback Statutes.  Those cases are still making their way through the system.  See this post and this one.

In his article, he estimates Quest and LabCorp have cost taxpayers $15 billion since 1996 in the form of false claims stemming from illegal kickbacks to Aetna, Cigna, United Healthcare and Blue Cross.

From the article:

These two labs are breaking federal laws by deeply discounting lab fees to private insurance companies, sometimes charging them for lab work even below their costs. In exchange, the insurance companies pressure doctors in their networks to send all of their patients’ lab work, including Medicare and Medicaid patients, to either Quest or LabCorp.

The labs fund the kickbacks — in the form of lower lab fees for private insurance patients — by charging Medicare and Medicaid patients the highest possible fee, instead of offering them a best price, and pressuring doctors to send all their lab work exclusively to them.

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Massachusetts charges two laboratories with health care fraud

 

Franey Medical Laboratories (Capewide Enterprises)

Franey Medical Laboratories (Capewide Enterprises)

Franey Medical Laboratories (FML) in Massachusetts and East Side Clinical Laboratory in Rhode Island have been charged by the state of Massachusetts with providing kickbacks involving both Medicaid and private insurance patients and for making a false Medicaid claim, according to CapeCodOnline.  Kathleen Franey-Lopes, the vice president of FML (and also the daughter of the owner, Robert Franey), faces the same charges.  Arraignment is scheduled for April 4.

Dr. Richard Ng, the director of a drug abuse clinic in Brighton, MA, allegedly provided the two labs with drug screening business.  In return, the two labs paid the salaries of some of Ng’s office staff, reportedly including the daughter, nephew and boyfriend of Renee Andrews, Ng’s former office manager.  Andrews has also been charged with multiple counts of Medicaid and private health insurance kickbacks and filing false Medicaid claims.

The state claims the labs netted $590,000 from the fraudulent scheme over a two year period.

Dr. Ng was charged with multiple counts of illegal prescribing, Medicaid false claims and Medicaid excess charges.  The Boston Globe reported the following regarding this case:

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Florida pathologist nets $4 million award for blowing whistle on dermatologist

DOJ seal

Pathologist Dr. Alan Freedman was awarded $4.046 million on Monday, February 11, 2013 for being the relator in a qui tam (whistleblower) lawsuit he filed against dermatologist Dr. Steven Wasserman and his (Dr. Freedman’s) former pathology laboratory.  Dr. Wasserman agreed to pay $26.1 million to settle allegations by the federal government that he violated the False Claims act by accepting illegal kickbacks from the pathology laboratory and for billing Medicare for thousands of unnecessary skin surgeries.

The laboratory for which Dr. Freedman used to work is Tampa Pathology Laboratory (TPL).  The government alleged that, beginning around 1997, Dr. Waserman entered into a business arrangement with TPL and its owner, Dr. Jose SuarezHoyos, in which Dr. Wasserman sent biopsies from Medicare patients to TPL, which would then process the biopsy, prepare slides, render a written diagnosis and provide a report to Dr. Wasserman.

You might be wondering what’s wrong with that.  Nothing except TPL is alleged to have not actually signed out the cases in question.  Instead, TPL provided Dr. Wasserman with unsigned reports with a place for Dr. Wasserman to sign as if he interpreted the biopsies.  Dr. Wasserman would then bill Medicare for the work, for which he received over $6 million in reimbursement.

Additionally, the government says as part of the agreement with TPL, Dr. Wasserman markedly increased the number of biopsy procedures he performed, thereby increasing the amount of business that would flow to TPL.

Furthermore, Dr. Wasserman allegedly performed thousands of medically unnecessary procedures called adjacent tissue transfers, which I believe is synonymous with advancement flaps.

TPL and Dr. SuarezHoyos settled with the government separately for $950,000.

Unfortunately, I imagine the kind of arrangement profiled here is not the least bit uncommon.

What makes this case even more interesting is the remarkable similarity to the pending whistleblower suit against Bostwick Laboratories (BL) where, among other things, BL is alleged to have provided urologists with draft reports of urine FISH studies that the urologist then signed and billed Medicare as if he/she actually interpreted the FISH test.

I do not know if Drs. Wasserman and SuarezHoyos have been kicked out of Medicare as a result of their settlements.

As of today, Dr. SuarezHoyos’ Florida medical license is clear/active with no discipline or public complaint on file.

The same goes for Dr. Wasserman’s medical license.

I have a very hard time believing the Florida medical board will be able to ignore this massive settlement, and I hope the medical licenses of Drs. Wasserman and SuarezHoyos see some action.

The DOJ’s press release on the case is here.

Update:  Dr. Wasserman was kicked out of Medicare, Medicaid and all other federal health programs.