On October 19, 2015, Millennium Health (Millennium) signed off on two separate settlements with the Department of Justice (DOJ) in order to bring to a close eight underlying whistleblower suits – brought by individuals, health care companies, and insurers – that have dogged the laboratory testing business for nearly four years. Millennium will restructure, either out-of-court or via a Chapter 11 Bankruptcy proceeding, in order to pay off the settlements.

Millennium, headquartered in San Diego, California, is one of the largest urine drug testing laboratories in the United States and was noted to have been, “the largest Medicare Part B biller in the country, receiving over $630 million from Medicare for laboratory-based drug testing through 2014.” Per the claims of the Whistleblowers, a large percentage of Millennium’s billing to Medicare and other government health programs, including Medicaid and TRICARE, were for urine drug tests that were not necessary, and therefore in violation of the False Claims Act, or were furnished pursuant to prohibited referrals from physicians under the Stark Law. In addition, Whistleblowers also alleged that Millennium submitted false claims to federal health care programs for genetic testing that were performed routinely and without an individualized assessment of need.

The Whistleblower’s complaints expose a variety of schemes, utilized by Millennium over the course of nearly eight years, to defraud federal health care programs. The schemes included the use of standing physician order forms (known as “Custom Profiles”) to promote routine, excessive, and unnecessary urine drug testing. An example of this practice cited in the government’s complaint notes that Millennium billed and received from Medicare, “more than $15 million for laboratory [urine drug testing] for phencyclidine (“PCP” or “angel dust”), abuse of which is virtually non-existent in the Medicare population.” Millennium disseminated false and misleading statements about drug abuse rates and the value of its testing services. Further, Millennium provided services and benefits – including free supplies and kickbacks to physicians – to encourage the use of its laboratory services. The most prominent example of this scheme was the provision of nearly one million “free” point-of-care drug test cups to physicians. The cups, however, came with a requirement that physicians refer additional testing to Millennium or pay back the cost of the “free” test cups, each of which cost $5-$6. Millennium’s provision of test cups generated more than 200,000 referrals for Medicare patients, “which resulted in Millennium receiving over $90 million” in Medicare reimbursements.

A news release issued by the U.S. Attorney’s office reiterates the government’s resolve to combat health care fraud and specifically cites the Millennium case as an achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative. Benjamin C. Mizer, head of the Justice Department’s Civil Division, stated, “We will not tolerate practices such as the ordering of excessive, non-patient specific tests and the provision of inducements to physicians that lead to unnecessary costs being imposed upon our nation’s health care programs.” HEAT, which was formed in 2009 as an enforcement partnership between the DOJ and the Department of Health and Human Services, has recovered more than $25.3 billion through False Claims Act cases.

Brian E. Dickerson

Nicole Hughes Waid