Diagnostic Labs Pay $4.7 Million to Settle Medicare and Medicaid Fraud Claims

Company Used Pathology Code to Bill Medicare and Medicaid for Unnecessary Services

Calloway Laboratories, Inc. has agreed to pay $4.7 million to settle allegations that it submitted false claims to Medicare and Medicaid.

The company provides clinical laboratory services, including urine drug testing, to physicians and other healthcare providers.  According to the government, the company routinely billed Medicare and Medicaid using a code for pathology services in addition to the code for urine drug testing.  As a result, the company was paid for both urine tests and pathology services.

Government investigators concluded, however, that the healthcare providers who ordered the urine tests did not knowingly order the pathology services and did not consider the pathology services to be medically necessary. 

The investigators also concluded that the diagnostic labs did not actually provide pathology services when they used the code seeking reimbursement for such services.  Instead, the testing labs merely conducted a type of medical review that did not qualify for reimbursement as pathology services.

This case presents a classic example of why the government relies on whistleblowers to stop Medicare and Medicaid fraud.  People who work inside the diagnostic lab are often the only ones who actually know which tests are actually ordered and performed.  Diagnostic lab billing staff are usually the only ones who know how claims to Medicare and Medicaid are being coded.  As a result, this type of fraud can often go undetected unless an honest employee is willing to blow the whistle.

In return, the government pays very substantial rewards and provides legal protection for those who report healthcare fraud.  Under the False Claims Act, a whistleblower is entitled to a reward of between 15% and 30% of the amount the government recovers.  In a case such as this one – where the government recovered $4.7 million – the whistleblower reward could be as high as $1.4 million.

If you have evidence that a diagnostic lab or other healthcare provider is submitting false claims to Medicare or Medicaid, then you should consult with an experienced whistleblower attorney immediately to protect your rights.  You could be entitled to a substantial reward and legal protections.

To arrange a free and confidential consultation with an experienced whistleblower lawyer, call John Howley, Esq. at (212) 601-2728, or click here to reach our law offices via email.

John Howley, Esq.