Press Release
Kentucky Lab Agrees to $4.9 Million Civil Judgment and Drug Treatment Center Enters Settlement to Pay $2.2 Million to Resolve False Claims Act Allegations
For Immediate Release
U.S. Attorney's Office, Eastern District of Kentucky
LEXINGTON, Ky. – The United States District Court for the Eastern District of Kentucky has entered an agreed judgment for $4.9 million, in favor of the United States and against AccuLab, LLC d/b/a Thoroughbred Diagnostics (“Thoroughbred”), holding the lab liable for submitting false claims for urine drug testing services to the Medicare and Kentucky Medicaid programs.
Relatedly, the United States entered into a settlement agreement with Edgewater Recovery Center, LLC (“Edgewater”), the drug rehabilitation facility that caused the submission of those false laboratory claims, to resolve its own False Claims Act liability. Pursuant to that settlement agreement, Edgewater will pay the Government $2.2 million.
Edgewater operates residential and outpatient drug rehabilitation facilities in multiple locations in Kentucky. The Government alleged that Edgewater requested the same complex panel of urine drug tests for all its patients on a weekly basis, without considering whether individual patients needed them. In typical cases, Edgewater did not even use the results of these expensive tests for the patients’ medical diagnosis or treatment.
Thoroughbred is a clinical laboratory based in Bowling Green, Ky., that performed urine drug tests for Edgewater’s patients. The Government alleged that Thoroughbred performed the urine drug tests requested by Edgewater and billed them to Medicare and Kentucky Medicaid, despite knowing the tests were not typically used for patients’ medical diagnosis or treatment. The Government further alleged that Thoroughbred billed for urine drug screens – a less complex test – performed on Edgewater specimens without a proper medical order requesting the test. As a result, Thoroughbred improperly received substantial payments from Medicare and Kentucky Medicaid.
The False Claims Act is a federal law that prohibits the submission of false or fraudulent claims for payment to the federal government. Medicare and Kentucky Medicaid only authorize payment for laboratory testing that is individualized to each patient, is used for medical diagnosis or treatment, and is supported by a proper medical order. As federally-funded health care programs, Medicare and Kentucky Medicaid require all tests and procedures to be medically necessary and in compliance with program rules and applicable law.
Under the terms of its Settlement Agreement with the United States, Edgewater agreed to pay $2,249,632.92 to resolve allegations that it caused the submission of false claims. Edgewater also entered into a Corporate Integrity Agreement with the U.S. Department of Health and Human Services, Office of Inspector General, requiring the business to appoint a Compliance Officer – who will be tasked with implementing policies to ensure compliance with federal health care program requirements and monitoring Edgewater’s day-to-day compliance activities – and retain an independent compliance expert to review their compliance program.
Thoroughbred separately agreed to entry of an Agreed Judgment in the case, in favor of the United States, in the amount of $4,925,441.42. To satisfy this judgment, Thoroughbred will immediately pay the United States $450,000 and then remit the proceeds resulting from its ceasing of lab operations. Thoroughbred must pay to the United States 100% of the net proceeds of the sale of its assets, 70% of its reimbursements from healthcare payors for one year, and any funds received pursuant to an Employee Retention Tax Credit.
“Medicare and Medicaid are intended – and funded – to provide medically necessary health care benefits to millions of eligible Americans,” said Carlton S. Shier, IV, United States Attorney for the Eastern District of Kentucky. “When the valuable and limited resources of these programs are depleted, by fraud, waste, or abuse, it has a profound impact on us all. We simply must prioritize taking the steps available to us to prevent inappropriate billing like this, and to return the funds to their proper purpose – providing necessary medical care.”
“Providers who participate in federal health care programs must follow the law governing the integrity of federally funded health care programs such as Medicare and Medicaid,” said Tamala E. Miles, Special Agent in Charge of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG). “HHS-OIG is committed to protecting the integrity of the Medicare and Medicaid programs and the people they serve. We will continue to work closely with our law enforcement partners to address allegations brought under the False Claims Act.”
The settlement resolves a lawsuit brought by a private citizen under the qui tam provisions of the False Claims Act. Under those provisions, a private party can file a civil action on behalf of the United States, thereby bringing allegations of fraud to the Government’s attention, and share in any financial recovery. As part of this resolution, the individual who filed the qui tam complaint will receive a portion of the settlement proceeds.
This case was investigated by the Affirmative Civil Enforcement section of the U.S. Attorney’s Office. Assistant United States Attorneys Benjamin Long and Katherine Sheridan represented the United States.
This case is captioned United States ex rel. Katharine Coale v. Edgewater Recovery Center, LLC, et al., Case No. 3:21-CV-00056-GFVT. The claims resolved by the settlement are allegations only, and there has been no determination of liability.
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Updated August 8, 2024
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False Claims Act
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