Millennium Health has entered into a $256 million settlement agreement with the Department of Justice (DOJ) to resolve claims that it billed federal health programs for medically unnecessary testing services and improperly provided in-kind remuneration to physicians who referred such services to Millennium, the DOJ announced October 19, 2015.
According to the DOJ, between 2008 and 2015, Millennium induced physicians to order medically unnecessary urine and genetic tests without making any assessment of individualized needs for such tests. Under federal law, the Medicare program only reimburses items and services that are “reasonable and necessary for the diagnosis or treatment of illness or injury.” 42 U.S.C. § 1395y(a). Providers requesting reimbursement from Medicare for items or services are obligated to ensure that such items are services are medically necessary. 42 C.F.R. § 1004.10. When a provider submits a request for payment to the Medicare program certifying that the items or services for which reimbursement is sought were medically necessary, and such items were not in fact medically necessary, the request for payment constitutes a false claim for purposes of the federal False Claims Act (FCA). Mikes v. Straus, 274 F.3d 687, 697–98 (2d Cir. 2001).
The DOJ also alleged that Millennium violated the federal Anti-Kickback Statute and Stark Law by providing “free point of care urine drug test cups to physicians—expressly conditioned on the physicians’ agreement to return the urine specimens to Millennium for hundreds of dollars’ worth of additional testing.” Subject to several exceptions and safe harbors, the federal Anti-Kickback Statute makes it unlawful to pay anything of value to induce or reward referrals for services reimbursed by federal healthcare programs. 42 U.S.C. § 1320a-7b. Subject to a number of exceptions, the federal “Stark Law” prohibits physicians from making referrals for certain health services to entities with which the physician has a financial relationship. 42 U.S.C. § 1395nn(a).
The settlement agreement resolves a number of qui tam actions pending in the District of Massachusetts. As part of the settlement, the qui tam relators will receive nearly $32 million of the $256 million recovery.
Millennium said it is in the process of negotiating an out-of-court debt restructuring or pre-arranged bankruptcy to facilitate its payment of the settlement. The settlement agreement includes a number of provisions to ensure Millennium’s financial obligations under the agreement are not extinguished through the restructuring.
— Andrew A. Kasper, Robinson, Bradshaw & Hinson, P.A., Charlotte, N.C.