Company was accused of manipulating clinical laboratory reports from previous COVID-19 tests to forge new results, and sending “negative” test results to patients even though their tests had never been completed
National COVID-19 testing chain Sameday Health (a.k.a., Sameday Technologies) will pay $22.5 million—and its contracted doctor an additional $3.9 million—to settle a case with the City of Los Angeles and the Los Angeles County Attorney’s Office over alleged falsifying, faking, and failing to deliver more than 500 COVID-19 test results to consumers.
According to an announcement from the Los Angeles City Attorney’s Office, the settlements require Sameday Health and physician Jeffrey Toll, MD, to pay restitution and civil penalties, and to comply with permanent injunctions prohibiting them from participating in the alleged activities that led to the City Attorney’s investigation.
“If you get a negative test, you assume it’s safe to go to work, visit family and friends, or take a vacation. But the victims of this alleged scheme might unknowingly have spread COVID to others or failed to receive timely and appropriate care themselves,” Los Angeles City Attorney Mike Feuer, JD, said in the announcement.
“We’ve intervened to protect consumers in numerous major COVID-related matters, but this may be the most significant consumer protection case to emerge from the pandemic,” he added.
Los Angeles City Attorney Mike Feuer, JD, (above) teamed with Los Angeles CountyDistrict Attorney George Gascón to reach a $26 million settlement with Sameday Health of Venice, Calif., and its contracted physician over phony COVID-19 test results. “It’s beyond outrageous that anyone would falsify COVID tests, as we allege happened here,” Feuer said in a statement. Clinical laboratories will want to note the fervor at which state officials are pursuing million-dollar settlements in COVID-19 fraud cases. (Photo copyright: California Globe.)
The LA City Attorney’s Complaint Against Sameday Technologies
Sameday Technologies, which operates under the name Sameday Health, has 55 COVID-19 testing sites throughout the country, with 16 locations in Los Angeles County, including five in the city.
The complaint released by the LA City Attorney’s Office states that consumers “paid a premium to get a rapid COVID-19 PCR test from Sameday Technologies, Inc. (Sameday), a Venice, Calif.-based start-up turned national chain that promised reliable COVID-19 test results in 24- hours or less.”
Sameday did not own its own clinical laboratory and its primary third-party vendor labs “were only required to aim to deliver results to Sameday’s consumers within 24-hours or 48-hours of the laboratory receiving the consumers’ testing samples from Sameday, along with all of the paperwork and information necessary to track, process, and report the result.
“But Sameday, unable to meet its 24-hour guarantee, sent hundreds of customers fake test results and laboratory reports stating that they had tested negative for COVID-19, when in reality Sameday’s laboratories had not run (and in many cases had not even received) the consumers’ tests,” the attorneys’ complaint states.
In addition to forging and falsifying hundreds of test results, the LA City Attorney’s Office alleges Sameday committed insurance fraud by partnering with a doctor to steer insured customers into three-minute-long medically unnecessary consultations. Using a virtual call center of physicians, the attorney’s office states, Sameday “submitted claims to insurance companies with codes that falsely represented the length of the consultations, misrepresented the purpose of the tests and consults, and sometimes sought reimbursement for calls that never even happened.” The state maintains Sameday in one year made “millions of dollars” from California-based insurance claims alone.
Additional Settlement with LA-based Medical Internist
In a statement provided to the Los Angeles Times, Sameday Health stated it was founded in September 2020 “to make fast, reliable, COVID testing available to everyone.
“In the early days, amidst the chaos of massive surges in demand for services, and shortages in supplies, we failed to meet the standards for excellence our customers deserve,” the company said. “We have corrected the problems that arose back in 2020 and have made significant investments in compliance and systems to ensure that we meet our customers’ expectations. We agreed to settle with the City Attorney and the LA District Attorney in order to move forward and to allow the 1,200 men and women of Sameday to place their focus on providing top-level service to the communities we serve.”
Sameday’s founder and CEO Felix Huettenbach also is named in the settlement, having agreed to join with Sameday in paying $9.5 million in restitution and $13 million in penalties and to no longer access any test result or medical records belonging to any Sameday Health customers.
The Los Angeles Times reported that a separate $3.9 million settlement was reached with Jeffrey Toll, MD, a Los Angeles-based internist who serves as Medical Director for concierge medical practice Good Life Medical Services.
Feuer and Los Angeles County District Attorney George Gascón maintain Toll was a partner in Sameday Health’s alleged insurance fraud. In their complaint, they state patient phone calls would last two to three minutes and cost insurers about $450. In exchange, Toll allegedly gave Sameday Health a large portion of the profits, the complaint alleges.
Toll’s attorney D. Shawn Burkley, JD, of Werksman Jackson and Quinn LLP denied any wrongdoing, telling the Los Angeles Times, “We settled the matter, but we do not believe that Dr. Toll did anything that was unethical.”
Settlements with Toll and Sameday Health must still be approved by a judge.
Patients to Receive Refunds for PCR Clinical Laboratory Tests
In late April, Feuer announced that Californians who paid out of pocket for PCR tests from Sameday Health between October 1 and December 31, 2020, are expected to be issued refunds from the company as part of the settlement, Patch reported.
More than 800 million COVID-19 tests have been performed in the United States since the pandemic began in 2020, according to Our World in Data statistics. Though incidents of fraud have been rare, clinical laboratory managers and pathologists who read Dark Daily will be aware of the growing number of state and federal fraud investigations being opened since the COVID-19 pandemic began to wane.
The settlement with Sameday Health may serve to put other pandemic startups—and their clinical laboratories—on notice that deceitful and fraudulent practices will likely not go unnoticed by federal or state agencies.
Investigators may look into various angles, including drive-through testing sites for COVID-19 and whether uninsured patients were verified before free tests
Three healthcare compliance attorneys gave a clear and concise message to clinical laboratory managers and pathologists at the 2022 Executive War College Conference on Laboratory and Pathology and Management: Expect the government to scrutinize reimbursements it paid for COVID-19 testing, particularly for testing conducted at drive-through sites that popped up all over the country.
“The important question is: What is the fair market value of those specimens?” noted attorney Emily Johnson, JD, a Member at law firm McDonald Hopkins in Chicago. Johnson spoke during a legal panel on Wednesday at the Executive War College in New Orleans.
The panel spent 75 minutes discussing various legal concerns, many of them related to COVID-19 testing, before a crowd of about 80 attendees.
Attorney Emily Johnson, JD, of Chicago law firm McDonald Hopkins explained possible COVID-19 test fraud enforcement to attendees at the 2022 Executive War College. (Photo copyright: The Dark Intelligence Group.)
Audits May Be Coming of HRSA Reimbursements for COVID-19 Testing
Consumer Reports noted in a January article that COVID-19 testing prices varied wildly both in traditional healthcare settings and popup sites—in some cases, exceeding $1,400.
The average price for such a test within an insurance company’s network was $130.
Some people paid for those tests out of pocket or got them covered by insurance. For uninsured patients, the federal Health Resources and Services Administration (HRSA) established a pool of money to reimburse labs for free COVID-19 tests. That pool recently dried up and Congress has not approved more funding.
The U.S. Department of Justice may investigate the uninsured aspect of claims—specifically, whether there were attempts by laboratory staff members to verify whether a patient truly was not covered by health insurance, explained Karen Lovitch, JD, Chair of the Health Law and Healthcare Enforcement Defense Practice at law firm Mintz in Washington.
These issues bring up False Claims Act risks, especially if a clinical laboratory audits its own COVID-19 test claims. “If labs go back retroactively and determine a claim was paid that shouldn’t have been paid, those labs must absolutely be prepared to return that money,” Lovitch warned.
Clinical Laboratories Need a Business Plan for Post-COVID-19 Testing
Related to HRSA payments ending for COVID-19 testing of uninsured payments, clinical laboratories should be wary about outright ending such testing without a documented business plan demonstrating the rationale for doing so, Johnson noted. That advice is relevant for labs and pathology groups that received financial assistance from HRSA’s Provider Relief Fund during the pandemic.
Some have interpreted information about the fund to mean providers are obligated to treat uninsured patients, Johnson added.
“If I stop accepting uninsured patients for COVID testing, am I in violation of the Provider Relief Fund?” she asked. A clearly documented reason for doing so, such as a need to keep the business afloat through paid testing, would be a first step for concerned medical laboratories to take, she added.
Another point for labs to ponder: In March, the federal government named Kevin Chambers, JD—who is currently Associate Deputy Attorney General at the DOJ—as the first Director of COVID-19 Fraud Enforcement.
That appointment emphasizes the government’s commitment to undercovering SARS-CoV-2 wrongdoing, said attorney David Gee, JD, a Partner at law firm Davis Wright Tremaine in Seattle. Gee rounded out the panel at the Executive War College.
“I guarantee Chambers’ bosses want him to demonstrate the government is serious about COVID-19 fraud,” Gee commented.
EKRA Becomes New Tool against COVID-19 Fraud
Finally, as Dark Daily previously reported, the Eliminating Kickbacks in Recovery Act of 2018 (EKRA) is sometimes being used to prosecute cases of alleged COVID-19 testing fraud.
EKRA has generally been associated with rules against paying clinical laboratory sales reps a commission based on testing volumes they generate. However, Johnson predicted more EKRA cases will be filed related to alleged kickbacks paid in return for referrals for COVID-19 testing.
“Prosecutors seem willing to go after these cases aggressively,” she added.
And in The Dark Report’s upcoming Regulatory Update, “Dept. of Justice: EKRA Governs Lab Sales and Marketing Commissions,” Dark Daily’s sister publication covers how a recent ruling by a federal judge may weaken EKRA and “immunize conduct that drives up medical costs.”
Subscribers to The Dark Report will want to stay informed on critical changes taking place that affect how EKRA operates.
COVID lab testing company reportedly was paid up to $124 million for COVID-19 testing What do an axe-throwing lounge, a donut shop, and a COVID-19 testing company have in common? All three were under the ownership of the same husband and wife. Apparently, though, COVID-19 medical laboratory testing was more lucrative. It’s been reported this married couple’s testing company received as much as $124 million just from federal health programs. The co-owners are now being sued by multiple state’s...
Start of ex-Theranos president and COO Sunny Balwani’s federal trial will be pushed to mid-March due to COVID-19 spike in California
Just when most clinical laboratory managers and pathologists thought the guilty verdict in the Elizabeth Holmes fraud case would bring an end to the saga, we learn her chapter in the Theranos story will instead extend another eight months to September when the former Silicon Valley CEO will be sentenced. However, a brand-new chapter will begin in March when the fraud trial of ex-Theranos president and COO Ramesh “Sunny” Balwani begins.
Holmes’ fraud trial concluded on January 3 with the jury convicting her on one count of conspiracy to defraud investors and three counts of wire fraud after seven days of deliberation and nearly four months of trial proceedings.
Holmes remains free on a $500,000 bond while awaiting sentencing.
Elizabeth Holmes is seen above arriving at the US District courthouse in San Jose, Calif. On January 3, the former Theranos CEO was convicted on three counts of wire fraud and one count of conspiracy to defraud investors. US District Judge Edward Davila set Holmes’ sentencing date for September 26. Clinical laboratory directors and pathologists who have closely followed the trial will have to wait eight months for the conclusion of this chapter in the Theranos saga. (Photo copyright: The Guardian.)
“I would be utterly shocked if she wasn’t sentenced to some term of imprisonment,” Amanda Kramer, JD, a former federal prosecutor who is now a partner with New York-based Covington & Burling LLP, told NPR.
“What is the sentence that will deter others who have a failing business from making the choice to commit fraud, rather than owning up to the failings and losing their dream?” she added.
Holmes, 37, faces a possible prison sentence of 20 years in prison as well as a $250,000 fine and possible restitution. But some legal experts expect a much shorter prison sentence for the disgraced CEO, who has no prior criminal history and is a first-time mother of a son born last July.
While sentencing typically takes place within a few months of a verdict being reached in a federal criminal trial, US District Judge Edward Davila set 1:30 p.m. September 26, 2022, as the date for Holmes’ sentencing hearing, according to his order dated January 12.
The Mercury News reported the lengthy delay in sentencing may be due to the start of Balwani’s upcoming trial on identical fraud charges. The delay in Holmes’ sentencing will allow for Balwani’s trial to begin in mid-March after being pushed back one month due to a spike in COVID-19 cases in California, The Mercury News reported.
Judge Davila will preside over Balwani’s trial as well.
Jury Acquits Holmes on Patient-related Charges
Holmes was acquitted of conspiracy to defraud patients of the now-defunct blood-testing laboratory and the jury failed to reach a unanimous decision on three other wire fraud charges.
University of Michigan Law Professor Barbara McQuade, a former US Attorney and an NBC News Legal Analyst, told CNBC she expects prosecutors to rethink their strategy in the Balwani trial based on the jury’s acquittal of Holmes on conspiracy and fraud charges involving Theranos patients.
“Knowing that this jury acquitted on all of the patient counts, I think that strategically, they should look to find a more direct way to explain why that is part of the fraud, that they necessarily knew that ultimately patients would be defrauded. And that although they didn’t know these individual patients by name, they knew that they existed in concept,” McQuade said.
One of the jurors in the Holmes’ trial, Wayne Kaatz, told ABC News he and other jurors were dismayed by their inability to come to a unanimous consensus on the three of the charges. A mistrial was declared on those three counts.
“We were very saddened,” Kaatz said. “We thought we had failed.”
Did Holmes Charm the Jury?
When Holmes dropped out of Stanford at age 19 to form Theranos, her goal, she claimed during testimony, was to transform healthcare by creating a blood-testing device capable of performing hundreds of clinical laboratory tests using a finger-stick of blood. She became a Silicon Valley sensation because of her charisma and charm, which she used to sell her dream to big money investors such as Oracle co-founder Larry Ellison and former US Secretary of State George Shultz.
Kaatz acknowledged Holmes’ personality also impacted the jury.
“It’s tough to convict somebody, especially somebody so likable, with such a positive dream,” Kaatz explained to ABC News, noting, however, that he voted guilty on the three counts on which the jury could not agree. “[We] respected Elizabeth’s belief in her technology, in her dream. [We thought], ‘She still believes in it, and we still believe she believes in it.’”
In the light of Holmes’ conviction, McQuade suggested it would not be shocking to see Balwani consider a plea deal in exchange for a lighter sentence.
“Could we perhaps, enter a guilty plea and get a reduction for acceptance of responsibility?” she said. “It’s certainly something that you have to look at.”
And so, the saga continues. Clinical laboratory directors and pathologists who followed Holmes’ trial with rapt interest should prepare for a new set of twists and turns as Ramesh Balwani prepares to face his own day in court.
Medical laboratory company’s patients in Southwest England previously had tested positive for COVID-19 ona Lateral Flow Device
If providing accurate test results is key to maintaining trust with healthcare consumers, a private COVID-19 testing laboratory in the United Kingdom (UK) may have permanently damaged its reputation after reporting an estimated 43,000 false negative COVID-19 RT-PCR (polymerase chain reaction) test results over a five-week span between September 8, 2021, and October 12, 2021.
For now, Immensa Health Clinic Ltd., a subsidiary of DNA testing company Dante Labs, had its testing operations suspended on October 15 while the UK Health Security Agency (UKSA) investigates the cause of false negative PCR test results from the company’s lab in Wolverhampton, England. The test results went out to people who previously had tested positive for COVID-19 on a lateral flow device (LFD).
“We have recently seen a rising number of positive LFD results subsequently testing negative on PCR. As a result of our investigation, we are working with NHS Test and Trace and the company to determine the laboratory technical issues which have led to inaccurate PCR results being issued to people. We have immediately suspended testing at this laboratory while we continue the investigation,” said Will Welfare, MBChB, Public Health Incident Director, UK Health Security Agency, in a UKHSA statement.
“There is no evidence of any faults with LFD or PCR test kits themselves and the public should remain confident in using them and in other laboratory services currently provided,” he added.
UK Government Officials Question How Lab Won Lucrative COVID-19 Testing Contracts
Immensa was awarded a £119 million (US$163.37 million) coronavirus testing contract by the British government in October 2020, just months after it was founded by Andrea Riposati, owner/CEO of Dante Labs, which has clinical laboratories in the UK, Italy, and the United Arab Emirates. The company’s corporate headquarters are in New York City while its scientific operations are based in the UK.
“Serious questions have to be asked about how this private firm—[which] didn’t exist before May 2020—was awarded a lucrative £120 million (US$164.64 million) contract to run this lab,” Member of Parliament (MP) Jonathan Ashworth (above), Labor Party Shadow Health Secretary, told The Guardian. “From duff PPE [personal protective equipment] to failing test kits, ministers have sprayed around tax money like confetti and utterly failed to deliver the service people deserve,” he added. (Photo copyright: The Mirror.)
NHS Test and Trace, the government program to track and help prevent the spread of COVID-19, has advised people who received the false test results, but who may still be infectious, to be retested.
In responding to the UKHSA’s action, Riposati pointed to Immensa’s track record and reiterated the laboratory’s emphasis on quality.
“We are fully collaborating with UKHSA on this matter. Quality is paramount for us,” Riposati said in the UKHSA statement. “We have proudly analyzed more than 2.5 million samples for NHS Test and Trace, working closely with the great teams at DHSC and UKHSA. We do not wish this matter or anything else to tarnish the amazing work done by the UK in this pandemic.”
Clinical Laboratories Not Accredited to Perform COVID-19 Testing
However, on October 18, 2021, The Guardian reported that the Immensa Health Clinic was not accredited by the UKAS, the UK’s independent accreditation service, before being appointed to perform COVID-19 testing. Dante Labs also has not been awarded UKAS accreditation, according to the newspaper report.
Government officials previously maintained that Immensa was “accredited to all of the appropriate standards.”
Immensa first made headlines in January 2021 when The Sun published an expose´ that included video of employees fighting, drinking, and bragging about watching porn while working at the clinical laboratory.
News of the testing failure at Immensa caused Tory MP Nigel Mills to tell The Sun, “This place should have been shut down for good when The Sun ran its [original] story. It is shocking it has been allowed to remain open and now there is an enormous mess.
“It’s a disgrace,” he added. “If shortcomings have emerged in the process here—which I strongly imagine they have—then heads should roll. The investigation should widen out and an audit should be carried out into other testing companies.”
Dante Labs Under Other Investigations
Immensa’s parent company, Dante Labs, is also under investigation in the UK due to concerns the company “may be treating its customers unfairly.”
A statement from the UK Competition and Markets Authority (CMA), outlined the UK government’s probe into Dante Labs. The statement cited the lab for:
Potentially not delivering PCR tests and/or results on time or at all,
Failing to respond to complaints or provide proper customer service,
Refusing or delaying refunds when requested, and
Providing terms and conditions that may unfairly limit consumers’ rights.
According to The Guardian, Dante Labs’ US operation also faced scrutiny in 2018 after the company admitting it had sent five used DNA test kits to people containing the saliva of other people. Dante Labs maintained its shipping company was the cause of the error.
US Labs Also Face Scrutiny over False Negative Test Results
Since the outbreak of SARS-CoV-2 in early 2020, there have been only a limited number of news accounts about clinical laboratories that reported a substantial number of inaccurate COVID-19 test results, either in the United States or the United Kingdom. In the US, there has been more news coverage of the federal Department of Justice (DOJ) prosecuting lab owners and related parties for submitting fraudulent claims for COVID-19 tests.
But the absence of those news accounts does not mean that there have been no incidents in the US where a lab testing company reported significant numbers of inaccurate COVID-19 test results.
In 2020, for example, Dark Daily reported on how Abbott Lab’s ID NOW COVID-19 rapid molecular test faced scrutiny over false negatives resulting in the FDA issuing a public warning about the point-of-care test’s accuracy after receiving 15 “adverse event reports” indicating some patients were receiving “false negative results.”
Then on June 22, 2020, KHN reported that the FDA had “received a total of 106 reports of adverse events for the Abbott test, a staggering increase. The agency has not received a single adverse event report for any other point-of-care tests meant to diagnose COVID-19.”
The UK lab’s failures are simply the latest example of how inaccurate test results erode the trust of healthcare consumers and draw the ire of politicians and government regulators. In this case, however, poor government oversight of a newly minted COVID-19 testing laboratory should face equal scrutiny.
