On June 3, the United States Attorney’s Office for the Southern District of Florida in Miami announced that it had filed a complaint under the False Claims Act (FCA) against Florida-based medical billing company AIMA. According to the DOJ’s complaint, AIMA provided billing advice and submitted bills to Medicare on behalf of a Florida diagnostic laboratory, Selecta. The government contends that for a period of 12 months between August 2018 and August 2019, AIMA billed Medicare over $15 million for genetic tests on behalf of Selecta, “even though AIMA knew or should have known that the testes were not medically necessary and were not ordered by the beneficiary’s treating physician.”
The complaint alleges that starting in the summer of 2018, the lab’s Medicare billing for genetic tests “skyrocketed.” According to the government, this was because the lab and its new owners began an aggressive telemarketing campaign targeting Medicare beneficiaries and selling them expensive CGx (cancer) and PGx (pharmaogenomics) genetic tests. The government contends that the genetic tests were sold to Medicare beneficiaries by marketers and were not ordered by physicians for a legitimate medical purpose.
The FCA complaint alleges that the fraudulent scheme began almost immediately after AIMA took over the lab’s billing. In fact, the government alleges that it was AIMA that showed the lab owners how much money they could make by marketing CGx and PGx tests. As evidence of this alleged scheme, the complaint quotes an email from AIMA to the lab’s owners, which explained which diagnosis codes “guaranteed maximum reimbursement” under certain Medicare Local Coverage Determinations (LCDs). The complaint also cites emails from AIMA’s owner advising the lab owners which genetic testing panels to order based on how much the panel would be reimbursed. As the billing company found new codes that paid well, they added the codes to the lab’s existing panels. According to the complaint, “AIMA’s employees were not just providing basic medical billing services, nor was their expertise in that area. Instead, AIMA’s role was to maximize profits for [the lab owners]. In turn, [the lab owners] paid AIMA for its services.”
The government’s complaint alleges that AIMA and its owners knew that there was no medical necessity for the tests that were being performed. The complaint says that AIMA had access to the lab’s EMR system where it reviewed “sham doctors’ notes and letters written to support the alleged medical necessity of genetic tests”:
The documents contained cut-and-paste and template language used for Medicare beneficiaries across the country that Selecta reached through telemarketing calls. They were used to paper the patient medical records. Even a brief review of the documents demonstrated that they did not reflect the use of genetic testing for genuine medical treatment or diagnoses. Nevertheless, AIMA reviewed the documentation, gave its approval to bill Medicare, and submitted the bills for the genetic testing.
According to the complaint, the address on the lab’s requisition forms was the same address for the telemedicine company that employed many of the doctors who were “ordering” the tests. “These doctors ordered genetic tests for Medicare beneficiaries throughout the country — they did not have a treating relationship with the beneficiaries and generally were not located in the same state as the beneficiaries.”
The complaint alleges that AIMA was aware of the lab’s business model, “which was to contact Medicare beneficiaries through telemarketing calls, ask beneficiaries a series of questions, obtain the beneficiaries’ genetic sample, and then connect the beneficiaries to ‘telemedicine doctors’ who would sign the requisitions (orders) for genetic testing.” The complaint also alleges that at least one employee of AIMA alerted the owners of the lab to the legality of these issues, and that AIMA continued to bill the claims even though CMS and its contractors continued to deny similar claims in pre- and post-payment reviews. This included a Medicare audit where the lab was alerted that there was a 100% error rate based on lack of medical necessity.
The government’s complaint against AIMA alleges that the Medicare Part B paid over $2.6 million worth of CGx and PGx claims submitted over a 12 month period, with over 5,500 claims submitted during that time period. If AIMA were to be found liable by a jury, that would mean that the minimum judgment it would face (based on 2018 FCA penalties) would be nearly $70 million or over 25 times the alleged “single damages.”
Although there is certainly nothing out of the ordinary with the government pursuing allegations of fraudulent billing related to CGx and PGx testing (see, for example, this June 2024 FCA settlement related based on similar allegations), what is less common is to pursue such claims against a provider’s outside billing company. Although such actions might not be very common, however, the FCA is certainly broad enough to extend its liability to an outside billing company under certain circumstances. Specifically, the FCA prohibits both “presenting” a false or fraudulent claim for payment and also “causing” such a claim to be presented. If the government (or a whistleblower) believes that the billing company knew — or should have known — of the falsity or fraudulent nature of the claims, then like AIMA, it can be held equally liable with the provider.
On the other hand, billing companies are not typically operated by individuals with clinical training or knowledge, nor is a billing company’s job to second guess medical necessity determinations by the rendering provider. In other words, if the lab and the ordering physician believe the tests at issue are medically necessary, is it the billing company’s place to second guess that determination? Although I’d like to answer the question “no,” cases like this demonstrate that it’s not so simple. The reality is that outside billing companies do have at least a “limited duty to inquire,” particularly in light of red flags like abnormally high volume, reimbursement, etc. Unfortunately, it is typically not enough to rely solely on a signed requisition or order form.
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The attorneys at Chilivis Grubman represent healthcare providers of all types and sizes in connection with False Claims Act investigations and litigation. If you need assistance with such a matter please contact us.