Tuesday, April 19, 2016

Premiertox Pays U.S. and Tennessee $2.5 Million to Resolve False Claims Act Lawsuit for Urine Drug Screening Services. Allegations of Unlawful Kickbacks, Lack of Medical Necessity

Quantitative urine drug screening ordered by physicians or other health care providers (such as drug treatment centers) and toxicology laboratories or the treatment and monitoring of patients have come under increased scrutiny and audits the past three years. 

The increased requirement of urine monitoring for pain management and drug addiction treatment resulted in companies and providers being more aggressive about the ordering of urine screenings. A recent case shows that qui tam relators are also filing actions against toxicology labs and the doctors who order the screeenings. At the heart of the case is the business relationships between the labs and referring providers.

Referral arrangements between ordering physicians and the laboratories are an issue. I expect to see many more qui tam lawsuits, civil lawsuits by insurance carriers and even some criminal prosecutions.

Understand that the government views providing free point of care testing cups is proving to be an illegal inducement. It also views ownership of any referring provider in the laboratory or a related entity which received profits from the urine tox referrals is also an illegal inducement. Labs and its marketing companies are coming up with creative ways to get referring physicians and drug treatment clinics, but be careful since this could be your company 3 years from now. A company like PremierTox can afford to pay millions but individuals tend to get more aggressive treatment (criminal allegations).  

On February 10, 2016, PremierTox 2.0, Inc. paid $2.5 million to resolve alleged violations of the False Claims Act. PremierTox previously did business in Tennessee under the name Nexus and is a company that provides drug urine screening services.  The government alleged that PremierTox submitted false claims when billing Medicare, TennCare and Kentucky Medicaid for drug urine screening services. PremiereTox 2.0 had a settlement and corporate integrity agreement back in 2014 that was a substantial (payment of $15 million) and it seems the company is resolving its legal matters from its old ownership. 

The settlement resolves the government’s allegations that PremierTox and Nexus submitted 3 types of false claims during the period of September 2011 through June 2014, while PremierTox was under its former ownership and management. First, the government alleged that PremierTox had a swapping arrangement, in which Nexus gave below cost discounts on its urine drug screen tests to patients in Tennessee without insurance, in exchange for physicians’ referring their patients with Medicare or TennCare coverage to Nexus. 

Second, the government contended that in Tennessee, Nexus submitted excessive claims to Medicare and TennCare for laboratory testing that was beyond what was medically reasonable and necessary. What happens here is that when the referring In addition, the government claimed that, in Kentucky, PremierTox provided point of care testing cups to medical offices free of charge to induce those providers to use PremierTox’s services. 

Under the settlement agreement, PremierTox paid a total of $2,500,000.  Of that amount, $2,125,000 covers the conduct in Tennessee, and $325,000 covers the conduct in Kentucky. The United States will receive $1,757,300 under the settlement, and Tennessee will receive $325,200.

The allegations resolved by the settlement were originally raised in two lawsuits filed against PremierTox in Tennessee and Kentucky under the qui tam, or whistleblower provision of the False Claims Act. This provision allows private citizens to bring civil suits on behalf of the government and to share in any recovery. The lawsuit in Tennessee was filed by a former office manager of a pain clinic in Cookeville. The relator in this case will receive $361,250. The relator who brought the lawsuit in Kentucky is the former CEO of PremierTox and will receive and $56,250.

The Tennessee lawsuit remains pending against several other defendants whom the United States and Tennessee allege violated the False Claims Act and the Tennessee Medicaid False Claims Act.  The remaining claims include allegations that Lenoir City chiropractor Matthew Anderson operated the Cookeville Center for Pain Management in which a nurse practitioner wrote prescriptions that Medicare and TennCare paid for, that had no legitimate medical purpose; and that Dr. David Florence likewise operated a pill mill at his Center for Advanced Medicine in Manchester, Tennessee. These are only allegations.

The two cases are docketed as United States ex rel. Norris v. Anderson, No. 2:13-cv-00035 (M.D. Tenn.) and United States ex rel. Duncan v. Nexus Lab, Inc., No. 1:14-cv-89-R (W.D. Ky.).  

Posted by Tracy Green, Esq.


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