Government Settles False Claims Act Allegations Against Kentucky Addiction Clinic, Clinical Lab and Two Doctors for $15.75 Million
SelfRefind, a chain of addiction treatment clinics, PremierTox LLC, a clinical laboratory that performs urine testing and Drs. Bryan Wood and Robin Peavler, the owners of SelfRefind and PremierTox, have agreed to pay $15.75 million to resolve allegations that they violated the False Claims Act by submitting claims to Medicare and Kentucky's Medicaid program for tests that were medically unnecessary, more expensive than those performed or billed in violation of the Stark Law, the Department of Justice announced today. SelfRefind provides addiction services to Medicare and Medicaid beneficiaries in 12 locations across Kentucky.
"Billing Medicare and Medicaid for lab tests that are not necessary contributes to the soaring costs of health care," said Assistant Attorney General for the Justice Department's Civil Division Stuart F. Delery. "Providers will be investigated aggressively and held accountable for falsely billing federal health care programs."
In December 2010, Wood and Peavler each purchased a 20 percent ownership stake in PremierTox, a new, independent clinical laboratory created to perform urine drug testing. The government alleged that, after Wood and Peavler became owners of PremierTox, SelfRefind began referring comprehensive urine drug screening tests to PremierTox that were unnecessary and many times more expensive than other suitable alternative tests. The government also alleged that PremierTox submitted to Medicare and Medicaid inflated claims that misidentified the class of drug being tested and billed for tests that were referred by SelfRefind in violation of the Stark law. The Stark Law forbids a laboratory from billing Medicare and Medicaid for certain services referred by physicians that have a financial relationship with the laboratory.
"Federal health care programs are essential to many of our citizens," said U.S. Attorney for the Eastern District of Kentucky Kerry B. Harvey. "We will not tolerate efforts by misguided providers to unfairly enrich themselves at the expense of these programs and the taxpaying public. This settlement underscores the continuing commitment of our office to use every available tool to protect these vital programs from false claims."
This settlement is the result of a coordinated effort among the Justice Department's Civil Division, the U.S. Attorney's Office for the Eastern District of Kentucky, the Kentucky Attorney General's Office and the U.S. Department of Health and Human Services Office of Inspector General. Of the total $15.75 million settlement amount, the federal share is $13.01 million, and the remaining $2.74 million will be paid to the Commonwealth of Kentucky.
This settlement illustrates the government's emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by Attorney General Eric Holder and Secretary of Health and Human Services Kathleen Sebelius. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in this effort is the False Claims Act. Since January 2009, the Justice Department has recovered a total of more than $17.3 billion through False Claims Act cases, with more than $12.4 billion of that amount recovered in cases involving fraud against federal health care programs.
The claims settled by this agreement are allegations only; there has been no determination of liability.