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“That Kind of Behavior Will Always Get Our Attention” – Wasteful Testing Fraud Scheme Allegations Settled for $16 Million

Date Published
Nov 11, 2021

November 11, 2021. The United States Department of Justice settled a case against a Nevada-based clinical laboratory regarding allegations of submitting claims to federal healthcare programs for medically unnecessary testing. Under the terms of the settlement, the MD Spine Solutions LLC, d/b/a MD Labs Inc. (MD Labs) and its owners paid $16 million. The whistleblower is another healthcare company, Omni Healthcare Inc., and they are entitled to receive 15% of the government’s recovery.

According to the allegations, MD Labs billed federal healthcare programs for various types of urine drug tests (UDT), including presumptive and confirmatory UDT. By way of background, healthcare providers may order “relatively inexpensive” presumptive testing first and then order more comprehensive confirmatory testing after seeing the results of the presumptive test.

The lab “gamed the system” by performing both presumptive and confirmatory tests at the same time and simultaneously reporting the results to providers. Providers tend to rely on the results of the confirmatory tests, rendering the presumptive test superfluous. MD Labs submitted claims to federal health care programs for both tests, even though providers did not rely on and would not have had time to review the results of the presumptive testing. Additionally, in some situations, MD Labs performed confirmatory testing without clear orders from healthcare providers.

Unnecessary medical testing drives up costs for both plan participants and taxpayers. To emphasize how much money in false claims the lab was making by billing for both types of UDT when only one test was used, the Centers for Medicare & Medicaid Services suspended payments to MD Labs in April 2021. Between April and October 2021, CMS held $1.6 million in suspense of payment to MD Labs. As Acting United States Attorney Nathaniel R. Mendell said about the expensive and unnecessary testing in this case, “That kind of behavior will always get our attention.”

There was a whistleblower who reported the fraud to the government . Per the settlement agreement, Omni Healthcare will receive 15% of every settlement payment MD Labs makes to the government. MD Labs is also required to enter into a Corporate Integrity Agreement (CIA). The Department of Justice needs whistleblowers to report Medicare and Medicaid fraud involving billing for unnecessary tests.

If you would like to report healthcare fraud, you can contact attorneys at Tycko & Zavareei LLP. Eva Gunasekera and Renée Brooker are former officials of the United States Department of Justice and prosecuted whistleblower cases under the False Claims Act. Eva was the Senior Counsel for Health Care Fraud. Renée served as Assistant Director at the United States Department of Justice, the office that supervises False Claims Act cases in all 94 United States District Courts. Eva and Renée now represent whistleblowers. For a free consultation, you can contact Eva Gunasekera at [email protected] or contact Renée at [email protected] (tel.: 202-417-3664). Visit Tycko & Zavareei LLP’s website for whistleblowers to learn more at

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