Court Finds That Labs Must Ensure That the Tests They Perform are Medically Necessary

By Russell Paul

On June 9, 2017, the United States District Court for the District of Columbia denied the defendant’s motion to dismiss in the False Claims Act lawsuit titled U.S. et al. ex rel. Tina D. Groat v. Boston Heart Diagnostics Corp., No. CV 15-487 (RBW), 2017 WL 2533341, at *1 (D.D.C. June 9, 2017).

In his opinion, Judge Reggie Walton held that a lab has an independent duty to certify that the tests it performs and for which it seeks government reimbursement are medically necessary. The lab cannot rely on the fact that a doctor ordered the lab test. If the tests are, in fact, not medically necessary, then the lab may have violated the False Claims Act when submitting claims for those tests to government health insurance providers.

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About the Lawsuit

The lawsuit alleges that Boston Heart, a Massachusetts-based diagnostic laboratory, performed medically unnecessary genetic and non-genetic cardiac-related tests, which the lab bundled into easy-to-order test panels and marketed to general practitioners.

Relator alleges that the tests were not medically necessary when the patient had certain diagnoses because the test results do not and cannot screen for current heart disease, do not predict the risk of future heart disease, and have no bearing on the treatment of the current health condition of a patient with those enumerated diagnoses. Relator alleges that Boston Heart wrongly billed government healthcare insurers such as Medicare and Medicaid for these unnecessary tests.

The Court Denied Defendant’s Motion to Dismiss

The Court found that a lab “has an obligation to establish that the tests for which it seeks government reimbursement are medically necessary because when it submits the CMS-1500 form, it certifies that the tests performed were medically necessary.” CMS Form 1500 requires the billing entity to certify that, among other things, “the services on this form were medically necessary”.

The Court pointed out that the government’s regulatory scheme “places the burden of establishing the medical necessity of diagnostic tests on the entity submitting the claim.” Garcia v. Sebelius, No. CV 10-8820 PA (RZx), 2011 WL 5434426, at *7 (C.D. Cal. Nov. 8, 2011) (citing 42 C.F.R. §§ 410.32(d) (2)(ii), (d)(3))

In support of its holding that a lab has an independent duty to certify that its tests are medically necessary, the Court noted that there were many other court decisions reviewing Medicare coverage determinations for claims submitted by laboratories in which the government determined that the tests at issue were not medically necessary, and the laboratories, not the ordering physicians, argued to the contrary.  The Court also noted that there were other False Claims Act actions against laboratories for allegedly submitting claims for medically unnecessary tests.

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By | 2018-07-09T11:41:55+00:00 June 26th, 2017|False Claims Act Legal News|