Whistleblower Attorney Comments on the Rise in Healthcare Fraud by Clinical Laboratories

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A whistleblower attorney from the national qui tam practice at Levy Konigsberg LLP discusses the potential rise in healthcare fraud related to clinical laboratory services and explains how whistleblowers can report fraud under the False Claims Act.

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Whistleblower attorney Brendan Little (right) with firm partner Alan J. Konigsberg (left).

“Whistleblowers play an integral role in protecting our healthcare system from fraud and abuse. The vast majority of cases that result in a recovery to the government were prompted by whistleblower complaints.

Brendan Little, an attorney in the national whistleblower practice at New York City based law firm Levy Konigsberg LLP, issued a commentary suggesting that two recent developments point to a rise in healthcare fraud by laboratories that provide clinical testing services to the Medicare and Medicaid Programs.

On June 25, 2014, the Office of the Inspector General (OIG) for the Department of Health and Human Services issued a special fraud alert regarding laboratory payments to referring physicians (1). The OIG is responsible for investigating fraud against the Medicare and Medicaid programs and only a handful of these special alerts have been issued in recent years.

According to the whistleblower attorney, the OIG alert specifically warned that payments made from clinical laboratories to referring physicians for specimen collection, processing, or packaging could violate the Stark Laws or Anti-Kickback Statute if the payments were intended to increase the number of tests ordered by the physician or were based upon the number of services that the physician orders. The OIG alert also warned physicians and laboratories about compensation paid to the physicians for reporting patient data or enrolling patients in registry studies. Any payments to the physician that are above fair-market value or vary with the amount of testing services ordered by the physician could be considered fraud if some of the services are paid for by the Medicare or Medicaid programs.

On August 15, 2014, the OIG issued a study revealing widespread “Questionable Billing for Medicare Part B Clinical Laboratory Services” (2). The OIG Study noted that from 2005 to 2010 Medicare Part B spending for laboratory services increased 29 percent to $8.2 billion. Looking at 13 measures of questionable billings, the study found that over 1,000 labs had unusually high billing for five or more measures of questionable billing for Medicare lab services in 2010. These labs received approximately $1 billion in 2010 just from Medicare.

The whistleblower attorney suggests that the two OIG reports point toa potential rise in the number of fraud cases related to clinical laboratory services that are paid for by the taxpayer-funded healthcare programs.

The False Claims Act is a federal law that allows a whistleblower to report fraud against a government program and receive a share of the government’s recovery as a reward for stepping forward. According to the Department of Justice, False Claims Act whistleblowers were paid approximately $345 million in 2013 for exposing fraud (3) by filing a whistleblower, or “qui tam” complaint.

It is estimated that $60 billion, or 10 percent, of Medicare’s annual spending is a result of fraud or systematic overcharging. Only about $4.3 billion of this was recovered through government enforcement actions in 2013, according to a recent New York Times article (4).

“Whistleblowers play an integral role in protecting our healthcare system from fraud and abuse. The vast majority of cases that result in a recovery to the government were prompted by whistleblower complaints. They deserve a lot of credit bringing these schemes to light, often at great personal risk,” remarked Levy Konigsberg attorney Brendan Little.

Individuals with evidence of fraud involving laboratory services can contact the qui tam attorneys at Levy Konigsberg for a free and confidential consultation by calling 212-605-6200 or visiting us on the web.

(1) Special Fraud Alert: Laboratory Payments to Referring Physicians, US DHHS, OIG, 06/25/2014: http://www.oig.hhs.gov/fraud/docs/alertsandbulletins/2014/OIG_SFA_Laboratory_Payments_06252014.pdf
(2) Questionable Billing for Medicare Part B Clinical Laboratory Services, US DHHS, OIG, 08/15/2014: http://www.oig.hhs.gov/oei/reports/oei-03-11-00730.pdf
(3) Justice Department Recovers $3.8 Billion from False Claims Act Cases in Fiscal Year 2013, US DOJ, 12/20/2013: http://www.justice.gov/opa/pr/2013/December/13-civ-1352.html
(4) Pervasive Medicare Fraud Proves Hard to Stop, The New York Times, 08/15/2014: http://www.nytimes.com/2014/08/16/business/uncovering-health-care-fraud-proves-elusive.html

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Brendan Little
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Whistleblower Attorneys
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