Lexington Herald Leader

By Karla Ward

A Lexington laboratory has agreed to pay more than $2.1 million to resolve government allegations that it incorrectly billed Medicare and Medicaid for urine drug testing services.

LabTox was facing civil allegations that it violated the False Claims Act, which prohibits submitting false or fraudulent claims to the federal government, according to a news release from the U.S. Attorney’s Office.

Between January 2014 and March 2015, LabTox claimed that it was using a “high complexity method” to conduct qualitative urine drug screenings on Medicare and Kentucky Medicaid beneficiaries, when it was actually using a low complexity method, the U.S. Attorney’s Office said a settlement agreement stated. By saying it was using a higher complexity method, the laboratory got higher payments from the government than it was entitled to.

The company also went against Medicare’s guidance and submitted claims for specimen validity testing between January 2014 and February 2016, according to the U.S. Attorney’s Office. Specimen validity testing is a quality control process used to make sure that a urine specimen to make sure it hasn’t been diluted or adulterated.

Under a settlement, the company agreed to pay $2,101,335. The lab also entered an integrity agreement with the U.S. Department of Health and Human Services Office of Inspector General that requires the company to appoint a chief clinical officer and have quarterly claims reviews conducted by an independent review organization.

LabTox is a Kentucky-owned clinical laboratory located on Old Rosebud Road at Hamburg, according to the company’s website.

The investigation into the company’s billing began after someone called in a tip to the U.S. Department of Health and Human Services’ hotline, according to the release. The government urges anyone with information about fraud, abuse or mismanagement of Medicare or Medicaid funds to call the hotline at 800-447-8477.

“Millions of Americans count on the medical benefits they receive from the Medicare and Medicaid programs,” Robert M. Duncan Jr., United States Attorney for the Eastern District of Kentucky, said in the release. “Ensuring that improper billing practices and payments do not deplete the limited resources available to these health care programs is absolutely critical. We will continue to combat inappropriate billing of claims and endeavor to protect the critical resources of these taxpayer-funded programs. That truly benefits us all.”