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DARK Daily Laboratory and Pathology News

DARK Daily is an e-briefing service providing up-to-the minute news of relevance for anyone working in diagnostic medicine, from clinical laboratories and pathology groups to lab industry suppliers and diagnostic technology companies. DARK Daily is part of The Dark Intelligence Group, Inc. and is dedicated to bringing useful business and management intelligence to laboratory managers, pathologists and diagnostic executives. Our recognized expertise in the strategic direction of laboratory medicine and the management of laboratories is available through DARK Daily, The Dark Report, free White Papers, Lab Resource Directory, the Executive War College on Laboratory and Pathology Management, Lab Quality Confab, and strategic consulting services.

Latest E-Briefings

Pathology Group of Louisiana Employees Lose Homes, Cars, and Personal Belongings in Disastrous ‘1,000-Year’ Louisiana Flooding

Intense rains triggered unprecedented flooding; anatomic pathology group continues lab testing services while helping staff members whose homes and vehicles were damaged

Clinical laboratory medicine is a community and this fact is being proven by the help now flowing to employees of an anatomic pathology laboratory who were catastrophically affected by the recent flooding in Louisiana, which was caused by an historic and unexpected rain event. The Red Cross called this the worst natural disaster since Hurricane Sandy just four years ago.

At Pathology Group of Louisiana (PGL) in Baton Rouge, 31 of its employees (24% of the staff) have “sustained total loss of their homes and belongings,” stated Pika Sdrougias, PGL’s Chief Executive Officer. “The unprecedented floods took everything: their homes, personal possessions, even their cars are now a total loss.” continue reading

Precision Healthcare Milestone Reached as Food and Drug Administration Clears New Multi-Marker Medical Laboratory Test to Detect Antibiotic-Resistant Bacteria

FDA issues press release following clearance of a clinical lab test to detect genetic markers that indicate the presence of Carbapenem-resistant Enterobacteriaceae

Clearance by the US Food and Drug Administration (FDA) of a new rapid, multi-marker genetic test designed to identify bacteria that are resistant to Carbapenem antibiotics was considered significant enough that the federal agency issued a press release announcing that the test was cleared and now available for use by physicians and clinical laboratories in the United States.

In the race to develop molecular assays and genetic tests for infectious disease that deliver improved sensitivity and specificity with a faster time-to-answer, this new test offers all three benefits. Results are available in just 48 minutes, for example.

It was on June 29, 2016, that the FDA cleared Cepheid’s Xpert Carba-R rapid-diagnostic test for marketing in the United States. This is the first clinical laboratory test cleared for market by the FDA that detects healthcare-associated infections (AKA, hospital-acquired infections or HAIs) through the use of genetic markers taken directly from clinical samples. The assay tests for genetic markers that indicate the presence of Carbapenem-resistant Enterobacteriaceae (CRE). continue reading

Texas Dermatopathology Laboratory Under Fire for Genetic Testing Scheme Targeting Soldiers Near Fort Hood

CBS News investigation alleges Cockerell Dermatopathology used service members to bill military health insurance system for millions of dollars of unnecessary screening tests

Following its investigation, CBS News reported allegations that a Texas dermatopathology laboratory has bilked the military healthcare system out of millions of dollars by enticing service members to sign up for unnecessary genetic and drug screening tests in exchange for $50 gift cards.

This latest incident adds to the growing number of investigations and health insurer lawsuits in recent years alleging fraudulent business practices within the clinical laboratory industry. Although only a handful of companies have been prosecuted by the federal government for fraud and abuse, The Dark Report last year noted that the hundreds of millions of dollars involved in these cases represent just a portion of the fraudulent clinical laboratory test claims that federal officials believe have been submitted in recent years by a much larger number of lab companies performing toxicology, pain management, and cardiology tests.

Clinical Laboratory Allegedly Committed Insurance Fraud According to CBS News

In its June 8, 2016, broadcast, CBS News exposed this latest alleged insurance scam involving Cockerell Dermatopathology Laboratory in Dallas. CBS News claims soldiers and their family members were drawn to makeshift clinics near Fort Hood Army base in Texas by a marketing campaign that offered a $50 Walmart gift card in exchange for providing DNA, a urine sample, and a copy of their military identification card. CBS said screening tests were then conducted and billed to Tricare, the health insurance program for military members, retirees, and their family members.

Linda Bozeman, wife of a service member, stated in the CBS News report that she visited a Fort Hood area clinic several times last year to earn extra money during the Christmas holiday season.

“They said they had this clinical research going and that they paid you by Walmart cards, so you’d give your urine,” said Bozeman, whose photocopied ID card was found by CBS News in a shed filled with discarded DNA specimens, medical information, Social Security numbers, and other paperwork.

CBS News reported that Cockerell Dermatopathology used Bozeman’s samples to bill Tricare 418 separate times for unneeded screenings for dozens of drugs such as PCP, cocaine, and methadone at a cost of nearly $7,000.

Accused Lab Received Millions in Payments from Tricare

According to CBS News, Cockerell Dermatopathology received more than $5 million in Tricare payments last year for allegedly unnecessary lab tests performed by Origen Laboratories in Dallas. The lab conducts molecular, genomics, and toxicology testing for Cockerell Dermatopathology, and also is owned by Clay Cockerell, MD, who is past President of the American Academy of Dermatology. Origen Laboratories is managed by ProGen Lab Systems, an independent laboratory management organization.

Retired 2-star General Richard Thomas (left), former head of Tricare, speaks with Jim Axelrod (right) of CBS News, about the investigation into Cockerell Dermatopathology of Dallas. The investigation was sparked by a CBS News story that alleged the clinical laboratory was part of a scheme to entice service members near Fort Hood Texas to provide DNA and urine samples that were used to bill the military health insurance system for millions of dollars of unnecessary genetic and drug screening tests. (Photo copyright: CBS News.)

Retired 2-star General Richard Thomas (left), former head of Tricare, speaks with Jim Axelrod (right) of CBS News, about the investigation into Cockerell Dermatopathology of Dallas. The investigation was sparked by a CBS News story that alleged the clinical laboratory was part of a scheme to entice service members near Fort Hood Texas to provide DNA and urine samples that were used to bill the military health insurance system for millions of dollars of unnecessary genetic and drug screening tests. (Photo copyright: CBS News.)

During a briefing with reporters that took place the day after the CBS News report aired, Pentagon Press Secretary Peter Cook did not confirm a Pentagon investigation was under way to determine who made money at Tricare’s expense, but noted, “Reports like this are obviously of concern to us and something we want to address.”

Cockerell Lab Responds to Allegations of Wrongdoing

An estimated 2,000 soldiers may have been duped, CBS News stated in its report.

In response to the CBS broadcast, Cockerell Dermatopathology posted a statement on its website in which the lab stated it would be refunding money received from the tests in question, which was reported by Military.com. The clinical laboratory company did not provide details on the amount being refunded or indicate who would receive reimbursements. Cockerell Dermatopathology stated that the lab would “vigorously defend [itself] against allegations of wrongdoing.”

“When Origen became aware that certain individuals were operating outside of the organization’s strict compliance requirements regarding the manner in which laboratory services are marketed, we took immediate action, including terminating individuals and relationships with those that acted in violation of the laboratory’s compliance policies,” Cockerell Dermatopathology wrote in that statement. “We are also voluntarily refunding monies resulting from these activities. In no case did Origen or Cockerell profit from these activities as suggested by the CBS story.”

The original statement is no longer available to be read on the Cockerell Dermatopathology website. However, in a “Clarification of Facts,” statement posted on July 11, Cockerell admitted to having a “relationship” with Origen Laboratories, which is managed by ProGen. He also claims that “months prior to the airing of the CBS story” ProGen learned of “individuals operating outside of the company’s compliance policies and requirements” and immediately terminated those individuals.

In July, following the CBS broadcast, Baylor University Medical Center announced that Alan Menter, MD, would remain as the university’s Chairman of Dermatology indefinitely. According to Dallas/Fort Worth Healthcare Daily, Clay Cockerell had been scheduled to take over Menter’s post on July 1. In a statement, Baylor praised Cockerell, stating, “Dr. Clay Cockerell is a well-regarded dermatologist who has an excellent clinical reputation. We were previously in discussions with Dr. Cockerell about a leadership position at Baylor University Medical Center. However, both parties have formally paused the talks.”

The article also reported that, in an e-mail, Cockerell stated, “While I work to correct the misinformation in the story, we thought it best to delay my appointment temporarily and mutually agreed to a short term pause.” Cockerell also wrote, “I do not own a lab in Killeen. The lab that is managed by ProGen performed tests on specimens that were sent to us that were induced by dishonest individuals. We learned about it over nine months ago. ProGen terminated relationships with all individuals involved, notified the payer, and began voluntarily returning all monies garnered by the tests associated with the scheme.” The amounts of the refunds have not been disclosed, however, CBS News did confirm in its report that an investigation by the federal government has begun.

Tricare is managed by the Defense Health Agency and is divided into three regions in the United States and multiple regions overseas, with each region served by a health insurance contractor. The Tricare South region, which includes Texas, is administered by Humana Military. A Humana media relations manager did not respond to Dark Daily’s request for a response to the CBS News report.

Over the past year, Dark Daily and its sister publication, The Dark Report have been contacted by numerous individuals claiming knowledge of businessmen, often located in Texas, who are organizing clinical enterprises designed to remunerate physicians for clinical laboratory test referrals in ways that would be recognized by experienced medical laboratory professionals as illegal inducements and kickbacks under federal law.

In several cases, these scammers have approached established clinical labs, such as hospital labs, to ask for an agreement wherein the established labs would perform testing on specimens referred by the clinical enterprises being organized by these individuals. Where such agreements have been negotiated, the scammers then use the credibility of their “reference lab” to persuade physicians to send patient lab test samples to their shell companies. Anyone with knowledge of similar arrangements is encouraged to contact the editors of The Dark Report in confidence.

—Andrea Downing Peck

Related Information:

U.S. Military Members Duped to Help Pull Off Insurance Fraud

Feds Investigating Insurance Fraud That Duped U.S. Military Members

Department of Defense Press Briefing by Pentagon Press Secretary Peter Cook in the Pentagon Briefing Room

In Response to the CBS News Story That Aired on June 8, 2016

Report: Troops Duped in Alleged Tricare Fraud

Baylor Taps the Brakes On Replacing the Chairman of Its Dermatology Program

Lab Testing Scheme Targets Tricare

Baylor Delays Leadership Appointment for Dermatologist Linked to Scam Involving Vets

Is New Cycle of Laboratory Fraud Plaguing the Industry?

Attention Anatomic Pathologists: Do You Know Medicare Is Prepared to Change How You Are Paid, Beginning on January 1, 2017?

Because of MIPS (a section of Medicare’s MACRA law), in coming years pathologists who participate will receive a bonus of as much as 9%, while those who do not participate will be penalizing up to 9%

If you are an anatomic pathologist, are you prepared to be paid more by Medicare starting on January 1, 2017? Do you and your pathology practice administrator know that, if you and your pathology group do nothing in 2017, Medicare could pay you significantly less in 2019 and the years beyond?

Answer no to either question and you have money at risk. In 2017, Medicare introduces a new payment program called the Merit-based Incentive Performance System (MIPS). This was authorized as part of the Medicare Access and CHIP Reauthorization Act (MACRA), which was passed in 2015. continue reading

University Westminster Study Reveals That High-powered Hand Dryers Could Be Less Hygienic than Low-powered Dryers and Paper Towels

High-powered hand dryers, like the ones used in public restrooms, are the latest pawns in the relentless pursuit to repulse individuals fixated on cleanliness

For decades, microbiologists have regularly fanned out in hospitals and swabbed the hands of doctors, nurses, and staff, to demonstrate how often infectious agents get passed on to patients through interactions with their caregivers (due to lack of proper handwashing procedures prior to entering a patient’s hospital room, for example). One thing that was a regular on these fishing expeditions was to swab the ties worn by physicians and report on the interesting and disturbing array of infectious agents that were found.

Well, the microbiologists are at it again! After studying hand drying techniques, researchers at The University of Westminster in London determined that high-powered jet air dryers can act like “virus hand grenades.” continue reading

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