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DOJ Obtains $140 Mil. Settlement in Drug Testing Case

Last Friday, the U.S. Department of Justice (DOJ) announced a settlement totaling $136,025,077 with multiple defendants accused of using illegal inducements to encourage physicians to refer urine drug tests to the defendants. 

The judgement was issued by the U.S. District Court for the District of South Carolina. The defendants included:

Oaktree Medical Centre P.C.,

FirstChoice Healthcare P.C.,

Labsource LLC, 

Pain Management Associates of the Carolinas LLC, and

Pain Management Associates of North Carolina P.C. 

Another charge in this case was that a lab and a clinic owned by one defendant billed federal healthcare programs for medically-unnecessary urine drug tests. 

This is a qui tam case. Multiple whistleblowers filed individual cases against the defendants and the DOJ consolidated these cases. This settlement originated from a complaint filed by the DOJ in 2019. 

Abbott Labs Destroyed Millions of COVID Test Materials

It is not just clinical laboratories throughout the U.S. that struggle to anticipate the demand for COVID-19 tests. It is an equally significant challenge for in vitro diagnostics (IVD) firms. 

Last month, The New York Times reported that Abbott Laboratories had destroyed “millions of paper testing cards” used in its BinaxNow COVID-19 Ag Card Home Test. This was done as the demand for COVID-19 testing declined earlier this year, from April through June. 

The NYT also reported that Abbott had laid off 400 people involved in the production of these tests and was now actively hiring hundreds of workers so it could ramp up production of these COVID-19 test kits. 

In a public statement it released on Aug. 20, Abbott said “We have not destroyed any finished BinaxNOW product, nor have we destroyed any usable test components needed by the market that could have been donated. In fact, because Abbott maintained usable test components, we’re now able to scale up.”

Microbiome Tests May Fuel Next Wave of Lab Fraud

Human microbiome testing may become the next source of rampant fraud and abuse in the lab testing industry. Several news outlets are reporting on how consumers are being offered expensive microbiome tests that have questionable clinical value. 

Few of these tests are covered by health insurance. Thus, consumers must pay for them. And yet, consumer response to advertisements of microbiome tests that promise insights into obesity, gastrointestinal problems, and immune system health is generally positive. 

Crunchbase reports that $1 billion in venture capital flowed into microbiome startup companies between 2015 and 2020. Similarly, PitchBook reports that it found more than a dozen companies that offer direct-to-consumer gut health services. 

Pathologists can expect that some physicians will recommend microbiome tests to their patients, particularly if microbiome labs find ways to pay inducements to physicians in return for test orders. 

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