Significant recent regulatory and enforcement activity related to laboratory fees and services continues to demonstrate an increased focus on this industry. Government enforcers are active in cases involving both the laboratories and physicians involved in kickback schemes.

The U.S. Department of Justice (DOJ) announced in late March and early April that three New Jersey doctors were sentenced to prison for accepting bribes in exchange for referring patients to a medical-testing laboratory company. The DOJ also announced this month that a New York physician admitted to accepting bribes in the same scheme. According to the DOJ, 26 physicians and 12 other individuals have been convicted to date of participating in the bribery scheme with the laboratory and the government has recovered $10.5 million in forfeitures.

The DOJ also announced this month that two laboratory companies reached settlements of $47 million and $1.5 million, respectively, with the government to resolve False Claims Act violations for paying kickbacks to physicians for patient referrals and waiving patient copayments and deductibles. The DOJ further stated that it would be intervening in False Claims Act (FCA) suits for related entities.

This enforcement activity should not be a surprise to the industry.  The U.S. Department of Health and Human Services Office of Inspector General (OIG) released an advisory opinion last month, where it stated that waiving patient fees could generate prohibited remuneration that violates the federal Anti-Kickback Statute (AKS). The OIG also released a Special Fraud Alert in June 2014 related to specimen arrangements and registry payments with laboratories.

Laboratory companies should carefully review policies, procedures and practices related to activities highlighted by recent enforcement and regulatory pronouncements.  Key areas to evaluate include:

• Payments to physicians and other referral sources that take into account the volume or value of business generated from the referral source
• Waiving patient fees, including copayments and deductibles
• Providing free or below-market goods or services
• Medically unnecessary testing and other practices that increase costs for patients and insurers
• Other practices that may encourage overutilization of laboratory services, inappropriately impact medical judgment, or cause unfair competition

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