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Yet Another UDT Lab Pays Millions to Resolve Claims That It Billed Medicare for Unnecessary Confirmatory Testing and Paid Kickbacks to Referral Sources

On March 31, 2022, the United States Attorney’s Office in the District of Massachusetts announced that Radeas LLC, a North Carolina-based lab, agreed to pay over $11.6 million to resolve allegations that it billed Medicare for unnecessary urine drug testing (UDT).

According to the settlement agreement, Radeas admitted that, when health care providers submitted urine samples to Radeas, the lab “performed both presumptive UDT and definitive UDT on the same sample at or near the same time, for the same or similar substances, often providing overlapping information for presumptive and definitive UDT.” As the government explained in its press release, “[a]bsent any physician review of a presumptive UDT result there was often nothing to support the medical necessity of a separate, simultaneous confirmatory test.”

Radeas also admitted that it “compensated sales organizations on a commission basis for their referrals of UDT to Radeas.” This conduct, the government alleged, violated the anti-kickback statute, which permits referral-based payments only to employees, not to independent (“1099”) sales representatives or other third parties. See 42 U.S.C. § 1320a–7b(b)(3)(B) (providing that the anti-kickback statute does not apply to “any amount paid by an employer to an employee . . . for employment in the provision of covered items or services”).

This is the latest in a series of District of Massachusetts settlements with UDT labs that performed unnecessary confirmatory testing and paid kickbacks to referral sources. For example, in 2015, Millennium Health paid $256 million to resolve allegations that it performed unnecessary UDT and paid kickbacks to physicians. More recently, in October 2021, MD Labs and its co-founders agreed to pay up to $16 million to resolve allegations that MD Labs performed presumptive and confirmatory testing on urine samples almost simultaneously – i.e., before a physician could review the results of the presumptive test and decide whether a confirmatory test was necessary – and then billed federal health care programs for both tests.

As these settlements demonstrate, fraud is rampant in the world of UDT testing, and the area is ripe for whistleblowers to bring False Claims Act qui tam cases that can generate substantial awards for the whistleblowers.