Compliance

Toxicology Lab Millennium Pays $256M to DOJ, Files For Bankruptcy

Whistleblower lawsuit alleged Millennium induced doctors to order unnecessary urine tests

IN ANOTHER MAJOR LAB FRAUD CASE, toxicology lab company Millennium Health will pay $256 million to settle allegations in a whistleblower lawsuit that it overbilled federal healthcare programs for unnecessary lab testing. Just 22 days after this agreement, Millennium Health filed a petition for a pre-packaged Chapter 11 bankruptcy on November 10.

In papers submitted to the U.S. Bankruptcy Court for the District of Delaware, Millennium said it plans to reduce its debt under a $1.75 billion credit agreement it signed last year. Millennium issued a press release stating “It contemplates, among other things, a reduction in the company’s debt by more than $1.15 billion and a contribution of $325 million by current equity holders. As a result of the restructuring, the lenders will become the new owners of Millennium.”

Settlement with DOJ

On October 19, the U.S. Department of Justice announced the agreement with Millennium Health, formerly Millennium Laboratories. The company agreed to pay the $256 million to settle alleged violations of the False Claims Act. It was alleged that Millennium billed Medicare, Medicaid and other federal health care programs for medically unnecessary urine drug and genetic testing. The DOJ further alleged that Millennium provided free point-of-care supplies to physicians who agreed to refer laboratory tests to Millennium.

As part of the settlement, Millennium agreed to enter into a five-year corporate integrity agreement (CIA) with the federal Department of Health and Human Services’ Office of Inspector General. Under the agreement, Millennium must hire a compliance officer to monitor day-to-day compliance and report to the OIG at least quarterly. On November 3, Millennium announced the hiring of Darrell W. Contreras, as its new Chief Compliance Officer.

Excessive Urine Drug Tests

In part of the settlement, Millennium will pay $227 million to resolve False Claims Act allegations that involved billing federal health care programs for excessive and unnecessary urine drug testing from January 1, 2008, through May 20, 2015, the DOJ alleged. Millennium had physicians order excessive urine drug tests by promoting custom profiles that were, in effect, standing orders that caused physicians to order large numbers of tests without assessing each patient’s needs, the DOJ said.

Millennium also provided free point-of-care urine drug test cups to physicians on the condition that they return urine specimens to Millennium for additional testing, a violation of the Stark Law and the Anti-Kickback Statute, the DOJ alleged.

In addition to paying $227 million, Millennium has also agreed to pay $10 million to resolve allegations that it submitted false claims to federal healthcare programs from January 1, 2012, through May 20, 2015, for what the DOJ said were routine genetic tests, again without assessing individual patient’s needs, the DOJ alleged.

The San Diego-based laboratory also will pay $19.2 million to the federal Centers for Medicare & Medicaid Services to resolve administrative actions related to Millennium’s urine drug test billing practices, the DOJ said.

One of the original cases began in 2012 when two whistleblowers and Omni Healthcare, a large physician group in Melbourne, Florida, alleged that Millennium was violating the federal False Claims Act. The DOJ joined the case and agreed to pay 15% of the $227 million plus interest from the settlement to the whistleblowers for the urine drug testing claims. Omni alone will be paid $1.48 million of the $10 million plus interest from the settlement for the genetic testing claims, the DOJ announced.

Attorneys Describe the Case

J. Marc Vezina and Monica P. Navarro of the Vezina Law Group in Birmingham, Michigan, and New Orleans, represented the whistleblowers and described the details of the case, including the custom-order profiles. “By using the custom-order profiles, Millennium was trying to make it easy for the doctors to order excess tests,” he said in an interview with THE DARK REPORT. “But those profiles ran afoul of Medicare because they were doctor specific and not patient specific.

“The doctor’s custom-order profile was created regardless of whether the doctor had one patient or 300 patients,” noted Vezina. “So every patient who came in was subjected to a battery of unnecessary tests. For example, a patient taking Xanax would be tested for methamphetamines, Vicodin, cocaine, angel dust, and PCP, and many of those drugs are uncommon among Medicare patients. Clearly, this is not good clinical practice.

“Also, Millennium ran confirmatory tests on everything positive or negative,” he stated. “Basically they were running tests to confirm negative findings by using the custom order profiles. Millennium was actively promoting confirmatory negatives in part because they ginned up homemade medical evidence to show that point-of-care tests are unreliable. For Millennium, this scheme was a hell of a good business model.

Lab Test Order Forms

“Millennium had their sales reps walk through physician offices and hand them order forms that were already filled out,” Vezina explained. “They know that doctors are very busy and so they’d stick the forms in the doctor’s face and ask the physicians to sign them and some did.

“In addition, a lot of doctors needed some incentive or push and so Millennium would offer to give them free point-of-care test cups in situations where Millennium’s competitors were all charging for the POC cups,” he added. “That might have been a small portion of the fraud but it helped to drive a lot of business to Millennium.”

The physicians at Omni noticed the fraud in part because it’s a large multispecialty group that operates two of its own clinical labs, Vezina said.

Aggressive Marketing

Many pathologists and lab managers working in the labs of hospitals and health systems are unaware of the widespread use of aggressive marketing practices in the toxicology and pain management sectors of the lab testing industry that many consider to be violations of federal antikickback laws. This is why there are whistleblower lawsuits in this sector and why government and private payers are instituting more restrictive coverage and reimbursement guidelines for these types of lab tests.

Contact J. Marc Vezina at 248-558-2701 or jmv@vezinalaw.com.

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