Are Lab Companies Back to Their Old Tricks of Bundling Medically Unnecessary Tests?

Millennium Health, formerly known as Millennium Laboratories, grew to be the largest Medicare Part B biller in the country, receiving $630 million from Medicare for laboratory-based drug testing from 2007 through 2014. According to the government, some of Millennium’s meteoric rise was due to a business plan that billed federal healthcare programs for excessive and unnecessary urine drug testing and that provided free items to physicians who agreed to refer expensive laboratory testing business. These allegations were at the heart of a recent $256 million False Claims Act Medicare fraud settlement.

This case was noteworthy because the bulk of allegations hearkened back the 1990’s, an era of FCA lab enforcement. With heightened awareness from the qui tam bar and the government, most of those fraud schemes eventually disappeared by the new millennium, into the 2000’s. Now, as then, these cases largely involve medical necessity, and the question of medical necessity turning on whether the medical tests provided were reasonable and necessary for the treatment and diagnosis of the individual patient’s illness or injury. In the recent Millennium case, the government alleged that the lab company cause physicians to order excessive, medically unnecessary drug tests, in part through the promotion of “custom profiles,” which, instead of being tailored to individual patients, were in effect standing orders that caused physicians to order large numbers of tests without an individualized assessment of each patient’s needs.

Perhaps the Millennium cases signal the return of the lab bundling season of the 1990s. If so, the government needs courageous qui tam whistleblowers to step forward.

More information for whistleblowers is located at the Nolan Auerbach & White website.