Clinical laboratories have come under increased scrutiny in the past few years, especially those that deal with COVID-19 testing or drug testing.
These federal investigations can be surprising and confusing for lab executives and workers. They also carry severe repercussions if they discover wrongdoing, mismanagement, or even unintentional mistakes.
Here are some of the most frequently asked questions that Dr. Nick Oberheiden, founding partner of the healthcare fraud defense law firm Oberheiden, P.C., gets in his daily work protecting the rights and interests of healthcare providers and laboratories.
1. Which Federal Laws Apply to Laboratories?
Laboratories have to comply with numerous federal laws. Some of the most important to be aware of are the:
Complying with these federal laws is not always easy. A lab defense lawyer can help facilities and providers follow the labyrinth of rules and regulations, and can help them fight against allegations of fraud or wrongdoing.
2. Which Federal Agencies Regulate Laboratories?
Lab owners are generally aware of the regulatory authority that the U.S. Food and Drug Administration (FDA) has over their labs. Many are also aware that the U.S. Centers for Medicare and Medicaid Services (CMS) is tasked with enforcing the rules that come with participating in these large government healthcare programs.
However, fewer lab owners know about the numerous federal agencies that can get involved in laboratory investigations and allegations of fraudulent activity. Chiefs among these other agencies are the:
These agencies have millions of dollars at their disposal and thousands of highly-trained agents to detect and prosecute healthcare fraud in laboratories.
3. What are the Penalties of Violating CLIA?
The Clinical Laboratories Improvement Act and its amendments (CLIA) comprise many of the regulations and quality standards that laboratories have to follow in the daily course of business. Complying with these rules is essential for every laboratory.
Non-compliance is also very costly. Not only can it lead to a loss of the lab’s CLIA certification – which can devastate a laboratory business – non-compliance can also carry civil penalties for each violation. Because these penalties are assessed for each violation, they can quickly run into hundreds of thousands of dollars. If the lab fails to comply with a single CLIA requirement but repeats that error for each test it conducts over a month or even a week, the civil penalties can accumulate extremely quickly.
4. Can Labs Lose Their License for Violating Federal Law?
Yes, one of the penalties that a lab can face for violating federal healthcare laws is the loss of their licenses to operate, including their CLIA certification and their FDA registration. Without these licenses, it can be nearly impossible to conduct business.
5. Are There Penalties for Unintentional Conduct?
There can be penalties for unintentional or accidental conduct in the laboratory, yes. However, it can depend on the specific federal law that is allegedly being violated. Many federal laws covering healthcare fraud require intentional conduct. Some, however, do not.
The False Claims Act is a good example. This Act can impose either civil or criminal liability for making false or fraudulent claims to defraud a government program. However, it is only a crime if the defendant acted with intent to defraud. If there was no such intent, violations only carry civil liability.
With that said, though, the penalties for unintentional conduct under the False Claims Act are not trivial. Civil liability generally requires financial reimbursement as well as a penalty for each violation. The reimbursement, alone, can imperil a laboratory’s finances. The penalties can be crippling.
6. What is the Best Way to Protect My Lab from Liability?
The best way to protect a laboratory from civil and criminal cases for violating federal healthcare law is to hire a skilled and experienced healthcare fraud and lab defense lawyer from a trusted law firm. This is the case, regardless of whether the lab is currently under federal investigations or not.
If the lab is not under federal investigation, a lab defense lawyer can help the institution and its executives and partners to create a compliance structure that reduces the chances that the lab ever draws the attention of law enforcement. Many lab owners try to create rules of compliance on their own, without legal assistance. These are the labs that tend to get investigated for fraud or noncompliance. When experienced healthcare fraud and lab defense lawyers are behind the creation of the rules of compliance, those rules are going to cover all of the bases that need to be covered. This can insulate the lab from liability by preventing an investigation from ever happening, in the first place.
If the lab is under federal investigation, then hiring a lab defense lawyer is even more important. These investigations only happen if a law enforcement agency has detected some sign of misconduct in the lab. The sole purpose of the investigation is to gather more evidence of that misconduct, not to absolve the laboratory and its personnel of wrongdoing.
Getting ahead of this investigation is essential. Hiring a lab defense lawyer early in the process can make a huge difference in the outcome. As Dr. Nick Oberheiden, founder of the healthcare defense law firm Oberheiden, P.C., explains, “Labs that bring a lawyer on board as soon as they learn of an investigation give their attorney the opportunity to conduct an internal review. This review can uncover potential strengths and weaknesses in law enforcement’s case against the lab. That information is critical when deciding what will be the best defense strategy for the investigation.”
