On May 9, the U.S. Attorney’s Office from the Eastern District of Kentucky announced that two Kentucky based businesses involved in conducting urine drug tests for the family court system agreed to collectively pay $1,740,620 to resolve allegations that they improperly billed those tests to Medicare and Kentucky Medicaid. The federally funded healthcare programs only pay for laboratory testing related to healthcare issues. According to the government’s press release “Medicaid’s regulations explicitly prohibit reimbursement for laboratory tests, such as urine drug tests, that were ordered by a court.”
The investigation and civil action taken by the U.S. Attorney’s Office initiated from disclosures from whistleblowers, two private citizens, who filed under the qui tam provision of the False Claims Act. Qui tam claims enable private citizens to file lawsuits on behalf of the government if they know of an individual or company defrauding the government. Qui tam whistleblowers are eligible to receive between 15 and 30% of the government’s recovery. In this case the whistleblowers received approximately $295,000 from the settlements.
The two companies in the settlement are Blue Waters Assessment and Testing Services, LLC (“BATS”) and BioTap Medical (“BioTap”). BATS is a Lexington based business that provides urine drug testing, including collecting samples from individuals who are ordered to do so as part of their court case by the Fayette County family courts. BioTap, and its clinical laboratory VerraLab JA, LLC, is based in Louisville and performs the drug tests on the urine samples. The vast majority of the settlement was paid by BioTap. According to the settlement agreement, BATS and its owner David Waters paid $250,000 pursuant to the Department of Justice’s inability-to-pay policy.
“The federal Medicaid and Medicare programs are designed – and funded – to provide health care benefits to eligible individuals with a medical necessity,” said Carlton S. Shier, IV, United States Attorney for the Eastern District of Kentucky. “These lab tests were not medically necessary and were improperly billed to these programs. It is important to all of us that steps are taken to return such misapplied funds to their appropriate purpose – providing medical care.”
“Submitting false claims to Medicare or Medicaid wastes taxpayer dollars and undermines the integrity of those programs,” said Tamala E. Miles, Special Agent in Charge at the Department of Health and Human Services, Office of Inspector General (HHS-OIG). “HHS-OIG remains committed to ensuring that those who attempt to take valuable resources away from their intended recipients are held accountable.”