"Lab Compliance Update"

Mass. AG Coakley Cites Two Labs in 48-Count Medicaid Kickback Case

Alleges that local physician steered drug tests to labs in exchange for payment of staff salaries

MASSACHUSETTS ATTORNEY GENERAL Martha Coakley has cited two lab companies in a case involving kickbacks related to drugs of abuse testing.

Coakley’s office made the announcement on March 8. Coakley alleges that fees were collected from patients illegally and that prescriptions for medications were illegally issued to patients diagnosed with opiate addiction.

Four Defendants Indicted

Earlier this month, a Suffolk County grand jury returned 48 indictments against four defendants in what Coakley said was an “industry-wide independent clinical laboratory investigation” by the AG’s Medicaid Fraud Division. Richard Ng, M.D., the former director of a drug abuse clinic in Brighton, was charged with 11 counts of illegal prescribing, nine counts of Medicaid false claims, and seven counts of Medicaid excess charges. The Medicaid kickback scheme was worth more than $590,000, the announcement said.

Coakley also charged Franey Medical Lab Inc., of Mashpee with one count of Medicaid kickbacks, one count of Medicaid false claims, and three counts of private health insurance kickbacks.

Ng’s former office manager, Renee Andrews, of Hudson, New Hampshire, was charged with four counts of Medicaid kickbacks, two counts of Medicaid false claims, and five counts of private health insurance kickbacks, the announcement said.

Allegedly, Andrews offered and entered into Medicaid kickback arrangements with two laboratories, Franey Medical Lab and East Side Clinical Laboratory in East Providence, Rhode Island, Coakley said. Her office did not report filing charges against East Side Clinical Laboratory.

Coakley charged Kathleen Franey- Lopes of Marstons Mills, with one count of Medicaid kickbacks, one count of Medicaid false claims, and three counts of private health insurance kickbacks. Franey-Lopes is the vice president of the lab and the daughter of Robert Franey, the owner of the lab, according to The Cape Cod Times. She was the primary contact with Ng’s office in 2007 and 2008, Coakley said.

Labs Paid Salaries

Coakley charged that, in exchange for Ng’s receiving urine drug screening business, the laboratories paid the salaries of some of Ng’s office staff. The defendants will be arraigned on April 4.

Since 2004, Coakley has brought enforcement actions against at least five other laboratory companies that offered lab tests in support of pain management testing services. Coakley won settlements in each of these cases.

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