A national clinical diagnostics laboratory company recently agreed to pay almost $15 million to settle allegations of a False Claims Act (FCA) violation. The allegations were tied to billing practices for urine drug testing, with the government claiming the lab billed for tests that lacked medical necessity. The Assistant Attorney General argued that the lab focused on “maximizing billing opportunities” instead of focusing on patient needs. The Assistant Attorney General also stated that this case is another example of the efforts they will take to continue their crackdown on healthcare fraud.
This crackdown continues to use one of the government’s most valuable tools: The FCA. The case highlights how the government can use the FCA to recoup large sums and provides valuable lessons for lab owners throughout the country. It is important to understand how these cases unfold so owners and interested parties can mitigate the risk of becoming a subject of an FCA violation investigation and know how to respond if they find themselves in the government’s crosshairs.
How does it start?
When allegations surface, the government typically conducts a thorough investigation before taking formal action. This period can last months or even years. During this time, investigators will generally review billing records, medical documentation and compliance procedures. Laboratory owners may not even be aware an investigation is underway, as many cases begin with sealed qui tam lawsuits filed by whistleblowers.
Once you receive formal notification, the stakes are clear. The FCA allows for significant financial penalties as well as exclusion from Medicare and Medicaid programs and reputational damage that can devastate your business relationships.
These consequences underscore the importance of taking allegations seriously from the outset. Even unintentional billing errors can result in substantial liability under the FCA’s strict standards.
What are my response options?
Laboratory owners facing FCA allegations have several potential paths forward. The response you choose can significantly impact the outcome of your case. Options often include:
- Cooperating fully with the investigation and potentially negotiating a settlement
- Conducting an internal audit to identify and correct any compliance issues
- Engaging legal counsel with experience in healthcare fraud defense
- Implementing enhanced compliance programs to demonstrate good faith efforts
Each situation is unique, and the appropriate strategy depends on the specific allegations and evidence involved. However, one universal truth applies: it is unwise to ignore the allegations.
How can I protect my laboratory?
Whether you are currently facing allegations or hoping to prevent them, robust compliance programs are one of your best defenses. Regular audits, staff training and clear documentation protocols can help identify potential issues before they become legal problems. The cost of prevention is always lower than the cost of defense.
False Claims Act allegations represent serious legal challenges that require immediate attention and experienced guidance. By understanding the process and responding appropriately, laboratory owners can navigate these difficult situations while protecting their business interests and professional standing.
Attorney John Rivas is responsible for this communication.
