CEO SUMMARY: On February 10, 15 armed agents from the Department of Justice (DOJ) arrived at a pathology laboratory in Chico, California, to serve a search warrant and seize billing records, computers, and other evidence believed to be associated with fraudulent billing for CPT code 88175. However, in the weeks since this raid took place, facts leaking out indicate that the search warrant was prepared based on an inaccurate understanding of laboratory billing practices. That would indicate that this raid by armed agents was made in error.
FIFTEEN ARMED FEDERAL AGENTS descended on a pathology laboratory in Chico, California, on February 10, and disrupted normal clinical services as they executed a search warrant for billing records, computers, and other evidence to support a government allegation that the pathology laboratory was fraudulently billing government health programs.
By itself, any raid by armed government agents of a long-established and reputable clinical laboratory or pathology group is an extraordinary event. That alone would make this a noteworthy story for the clinical laboratory industry. But this story has an added twist.
Was the Lab Raided in Error?
Accumulating facts point to a possible conclusion that armed federal agents raided this law-abiding pathology laboratory in error! Both the government and the pathology lab have declined to speak on the public record about this episode, but THE DARK REPORT has learned facts that would point to government incompetence and poor communication involving state and federal agencies.
The February 10 raid was directed at Pathology Sciences Medical Group (PSMG). This group, located in California’s Central Valley, has seven pathologists and has been in operation for more than 50 years. Principals at PSMG did not return THE DARK REPORT’S calls and emails.
At California’s Department of Health Care Services (DHCS) a spokesman stated that the department would not comment on the raid of the PSMG laboratory nor other aspects of this case.
In its monthly newsletter, the California Society of Pathologists said PSMG was served with a search warrant by at least 15 armed agents from the federal Department of Justice (DOJ) asking for records related to billing for Pap smears.
“They [PSMG pathologists] were informed that there were allegations of fraud in the billing of liquid-based Pap smears and CPT 88175, screening by automated system and manual rescreening, under physician supervision,” the article said. “It appears that DOJ was informed that this code would require the patient to return for a second Pap smear, i.e. re-screening.
“Since they had interviewed some of the patients who had been the recipients of that service,” continued the CSP article, “and had been informed that only one specimen collection occurred, the conclusion was that it represented fraudulent billing. There obviously is a major misunderstanding on that code and what it represents.”
Records Seized During Raid
An attorney representing PSMG did speak with THE DARK REPORT about aspects of the DOJ raid. The lawyer acknowledged that the federal agents did execute a warrant associated with the lab’s billing for CPT code 88175 and that, during the raid, records were seized from PSMG’s lab.
When asked if the Medi-Cal fraud control team had made a mistake, this attorney responded with carefully phrased language, noting that government officials had a “misapprehension” about what was going on and that decisions which led to the raid were, in his view, based on “some bad information” and a “misunderstanding” about CPT code 88175.
So far, news that armed government agents raided and disrupted a legitimate business in California, based on wrong information from a Medi-Cal fraud team, has not caught the attention of newspapers or television stations in the state.
Pap Smear Billing
Yet, if the known facts are accurate, then DOJ agents executed a search warrant that was based on flawed information. If true, this is a major violation of the constitutional and civil rights of PSMG, its owners, and its employees.
In cases where a drug raid happens in error, and the home of a law-abiding family is entered in error by armed government agents, the media regularly publicize such incidents. In response to these news accounts, the responsible government agencies are often seen on the evening TV news apologizing for executing a wrongful search warrant upon an innocent family.
Many pathologists and laboratory administrators will interpret this raid— assuming it was made in error because of a wrong interpretation of CPT code 88175— as an abuse of government power. Further, it caused considerable disruption to the daily operation of this long-established and respected pathology laboratory.
For example, having billing records and computers suddenly seized and removed from the premises certainly caused major problems for PSMG during the days and weeks that followed. If this search warrant was based on wrong information, then the responsible government agencies should—at a minimum—publicly state the true facts about PSMG’s compliance with billing requirements and apologize for the raid and its expensive consequences.
How Things Went Wrong
It would serve the entire laboratory testing industry well if the full details of this episode were made public. Similarly, the government agencies involved for this raid should publicly acknowledge what went wrong and provide assurances to the state’s medical laboratories that a similar mistake will not be made again in the future.
To summarize this affair, THE DARK REPORT observes that a strong offense against government abuse of power is just as important as a strong defense. Assume that state and federal agencies made a mistake in issuing the search warrant and executing it against a long-established pathology laboratory that was innocent of the accusations that supported the search warrant.
If this was true, then leaders of lab associations at both the state and national levels should publicly support the victimized laboratory. It would benefit all their members if these laboratory associations spoke to the media and called for full disclosure and an apology to the laboratory that had to endure an unjustified raid by armed agents and significant disruption to its clinical services.