Attorney General Bob Ferguson today announced that Millennium Health laboratories will pay back $256 million to the states and federal government for illegal revenue gained through a kickback scheme designed to increase the number of laboratory tests it got paid to process. For Washington, this agreement will provide the state $426,000 in Medicaid reimbursement, which will be shared with the federal government.
The agreement resolves allegations that between 2008 and 2015, Millennium billed Medicare, Medicaid and other government health care programs for unnecessary urinalysis and genetic testing — which constitute violations of Washington’s Medicaid Fraud False Claims Act — and provided kickbacks to physicians who agreed to refer expensive laboratory testing business to Millennium. Millennium, headquartered in San Diego, is one of the largest urine drug testing laboratories in the United States and conducts business nationwide.
“I will not tolerate fraudulent billing that steals from taxpayers and diverts funding from important medical needs,” Ferguson said. “Today, I am sending a clear message to fraudsters — we will hold you accountable.”
Washington led the investigation with the Attorneys General of Florida, Georgia, New York and North Carolina. Assistant Attorney General Sarah Parkman represented the State of Washington.
The states coordinated their investigation in conjunction with the Department of Justice Civil Division’s Commercial Litigation branch, and the U.S. Attorney’s Office for the District of Massachusetts.
Washington was able to participate in the investigation of Millennium Health in large part thanks to the state’s Medicaid Fraud False Claims Act, which is set to expire in June 2016 unless renewed by the Legislature. Washington’s civil enforcement actions pursuant to the Act return $3 to the state’s Medicaid program for every $1 the state spends on enforcement.
Urine drug and genetic testing
Millennium has agreed to pay $227 million to resolve allegations that it systematically billed federal health care programs for excessive and unnecessary urine drug testing from Jan. 1, 2008 through May 20, 2015.
The states alleged that Millennium offered kickbacks to physicians who worked with chronic pain management patients. Physicians would order overly broad urine drug lab tests, instead of tailoring the test to fit each patient’s needs. In return for the broad lab tests, Millennium offered free urine drug test cups to physicians — expressly conditioned on the physicians’ agreement to return the urine specimens to Millennium for hundreds of dollars’ worth of additional testing.
Millennium has also agreed to pay $10 million to resolve allegations it submitted false claims to federal health care programs from Jan. 1, 2012 through May 20, 2015 for unnecessary genetic testing.
Genetic testing is appropriate for pain management patients who have poor or no response to traditional pain medication. Millennium, however, encouraged providers to routinely order genetic testing for all patients, regardless of their condition.
Millennium has entered into a corporate integrity agreement with the federal Department of Health and Human Services — Office of Inspector General, which will monitor its compliance with the law. In addition, Millennium will pay $19 million to the Centers for Medicare and Medicaid Services to resolve certain administrative actions related to Millennium’s urine drug test billing practices.
Washington’s share of the agreement is $426,000. After returning the federal share — Medicaid is jointly funded by the state and federal governments — Washington state’s Medicaid program will receive $282,481.
The relevant agreement documents can be found here and here.
Medicaid False Claims Act
The False Claims Act allegations resolved were originally brought in lawsuits filed by whistleblowers under the qui tam provisions of the False Claims Act.
If Washington’s Medicaid False Claims Act is not renewed in the coming legislative session, the state risks a significant financial hit. According to a joint legislative audit report, since the Medicaid Fraud False Claims Act has been in effect, the state has had a 28 percent increase in civil fraud recoveries, at least $2.8 million of which would not have come back to the state without the act.
The state would also lose its full partnership with the National Medicaid Fraud Control Unit, reducing its ability to be fully represented in other large, national Medicaid fraud cases. Whistleblower protections provided by the Act would also disappear.
Without Legislative action, the current act will expire June 30, 2016.
