Los Angeles Reaches $26 Million Settlement with Sameday Health and its Contract Doctor Over Alleged Phony COVID-19 Lab Test Results That Put Patients at Risk and Cost Insurers Millions
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.
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.
In “Department of Justice Recovers $1.8B from Medical Laboratory Owners and Others Accused of Alleged Healthcare Fraud During COVID-19 Pandemic,” we covered how unscrupulous clinical laboratory operators quickly sought to take advantage of the critical demand for SARS-CoV-2 testing and defraud the federal government. And how, the resulting federal prosecutions involved dozens of medical laboratory owners and operators who paid back “hundreds of millions in alleged federal healthcare program losses,” according to Goodwin Life Sciences Perspectives.
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.
—Andrea Downing Peck
Related Information:
‘Beyond Outrageous’: L.A. Company Faked COVID Test Results, Authorities Allege
The People of the State of California versus Sameday Technologies, Inc.
Announcing $26 Million Settlement over Allegedly Fake COVID Test Results with Sameday Health, Others
Fraudulent COVID Testing Company to Refund Victims: LA City Attorney
King’s College London Researchers Discover Causal Link between Blood Type and COVID-19 Severity; May Provide Clinical Laboratories with a Useful Diagnostic Insight
Findings are ‘a vital first step in discovering potentially valuable targets for development of new [COVID-19] treatments,’ noted co-first author of the study
Researchers at King’s College London (KCL) have determined that levels of certain blood proteins specific to each person’s blood type can be “causally linked” to an increased risk of hospitalization and death from a COVID-19 infection. The scientists also found that a person’s genetics play a key role in establishing the levels of those proteins in the blood.
This is relevant for clinical laboratories—particularly hospital/health system laboratories—because testing for specific proteins in the blood by medical laboratories could help flag incoming patients at higher risk for an acute COVID-19 infection.
Also, “By identifying this suite of proteins, the research has highlighted a number [of] possible targets for drugs that could be used to help treat severe COVID-19,” noted a KCL news release.
Identifying certain drugs that would be more effective for specific individuals or healthcare groups is a core goal of precision medicine.
The KCL researchers published their findings in the journal PLOS Genetics, titled, “Proteome-wide Mendelian Randomization Identifies Causal Links between Blood Proteins and Severe COVID-19.”
Genetic Variants Linked to Causality
Since the COVID-19 pandemic began in late 2019, scientists and researchers have been vigorously trying to understand the SARS-CoV-2 coronavirus and determine why some patients have more severe symptoms than others.
To conduct their study, the KCL researchers screened more than 3,000 blood proteins to identify which proteins have a causal link to hospitalization risk, the need for respiratory support, and death from a severe COVID-19 infection.
“Causality between exposure and disease can be established because genetic variants inherited from parent to offspring are randomly assigned at conception similar to how a randomized controlled trial assigns people to groups,” said Vincent Millischer, MD, PhD, Medical University of Vienna and co-first author of the study in the KCL news release.
“In our study, the groups are defined by their genetic propensity to different blood protein levels, allowing an assessment of causal direction from high blood protein levels to COVID-19 severity whilst avoiding influence of environmental effects,” he added.
The scientists selected genetic variants, known as single nucleotide polymorphisms, that were strongly associated with blood protein levels. They then performed their analysis using Mendelian randomization to test the causal associations of those blood proteins with the development of severe COVID-19 infections.
“Mendelian randomization uses genetic variants associated with a trait [e.g., protein level] and measures their causal effect on disease outcomes, [avoiding] environmental confounding factors, such as lifestyle, being physically ill, etc.,” Alish Palmos, PhD, told Medical News Today. Palmos is a Postdoctoral Research Associate at King’s College London’s Social, Genetic, and Developmental Psychiatry Center and co-first author of the study.
Blood Groups Linked to COVID-19 Hospitalization, Death
One of the most important findings of the KCL research is a causal association between COVID-19 severity and an enzyme called ABO, which determines blood type. This discovery suggests that blood groups perform an instrumental role in whether individuals develop severe forms of the illness.
“The enzyme helps determine the blood group of an individual and our study has linked it with both risk of hospitalization and the need of respiratory support or death,” said Christopher Hübel, PhD, Postdoctoral Research Associate, King’s College and co-last author of the study in the press release. “Our study does not link precise blood group with risk of severe COVID-19, but since previous research has found that proportion of people who are group A is higher in COVID-19 positive individuals, this suggests that blood group A is more likely candidate for follow-up studies.”
The KCL researchers uncovered several compelling findings regarding blood proteins and COVID-19, including:
- The discovery of six blood markers that were significantly associated with an elevated risk of hospitalization.
- The discovery of nine blood markers that were significantly associated with a decreased risk of hospitalization.
- Consistent results indicating hospitalization being significantly associated with decreased levels of macrophage inflammatory protein.
- Five blood markers associated with the need for respiratory support or death.
- Eight blood markers causally associated with a statistically significantly decreased risk of need for respiratory support or death.
- Consistent results with respiratory support or death being significantly causally associated with decreased levels of neprilysin.
Developing New COVID-19 Treatments and Preventative Therapies
“What we have done in our study is provide a shortlist for the next stage of research,” said Gerome Breen, PhD, in the KCL news release. Breen is Professor of Psychiatric Genetics at King’s College London’s Institute of Psychiatry, Psychology and Neuroscience, and co-last author of the study.
“Out of 1000s of blood proteins we have whittled it down to about 14 that have some form of causal connection to the risk of severe COVID-19 and present a potentially important avenue for further research to better understand the mechanisms behind COVID-19 with an ultimate aim of developing new treatments but potentially also preventative therapies,” he added.
Further research and clinical investigation are needed to validate the King’s College London researchers’ findings. However, their insights could result in new clinical laboratory tests and personalized treatments for COVID-19.
—JP Schlingman
Related Information:
Genetic Study Reveals Causal Link Between Blood Type and COVID Severity
New Research Suggests a Causal Link Between Blood Group and Severe COVID-19
Researchers Identify Six Proteins Linked with Severe COVID-19
COVID: Risk of Severe Disease Could be in Your Blood, New Research Finds
COVID-19 Testing Reimbursement Scrutiny is Coming for Clinical Laboratories, Attorneys Predict at Executive War College
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.
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.
—Scott Wallask
Related Information:
Your Questions About Home COVID-19 Tests, Answered
Supreme Court May Be Partly to Blame for Shortage of At-Home Rapid COVID-19 Tests During Pandemic
High court decision in 2012 altered patent law and effectively blocked protections for certain clinical laboratory diagnostic tests and procedures
Clinical laboratory leaders and pathologists will be interested to learn that a US Supreme Court (SCOTUS) decision from 2012 may be partly to blame for the shortage of at-home COVID-19 rapid antigen tests while the SARS-CoV-2 Omicron variant surged this past winter.
During that time, consumer demand for all COVID-19 at-home tests quickly depleted the already dwindling supply. However, the 2012 SCOTUS ruling in Mayo Collaborative Services v. Prometheus—which rewrote patent law in the biotech industry—effectively blocked patent protections for many medical laboratory diagnostic tests and procedures, wrote Paul R. Michel in a column he penned for STAT.
Michel served on the United States Court of Appeals for the Federal Circuit from 1988 to his retirement in 2010, and formerly was its chief judge from 2004 to 2010.
Shortage of COVID-19 Home Tests Due to ‘Tsunami of Demand’
The diagnostic test shortage that continued throughout the second year of the pandemic has been blamed on a “tsunami of demand,” as vaccine and testing mandates went into effect, according to CNBC. Other causes of the shortages were linked to shortages of raw materials and the US Food and Drug Administration’s slow review process, The Wall Street Journal reported.
However, as Michel noted in STAT, Mayo v. Prometheus “was a legal bombshell that upended the prior law on patent eligibility. And it has had disastrous real-world consequences for Americans.”
San Diego-based Prometheus Laboratories had developed a diagnostic test that measured how well patients metabolized medicines to treat autoimmune diseases. When Mayo Collective Services, which does business as Mayo Clinic Laboratories, developed its own test based on the Prometheus design, Prometheus sued for patent infringement. But it lost when the case reached the Supreme Court.
Michel points out that developing new clinical laboratory diagnostic tests and methods is “slow and expensive” work that becomes financially unsustainable for biotech companies when patent protections are removed.
In the “wake of the Mayo decision,” he wrote, many small biotech companies that had been focused on developing new diagnostics went out of business. Simultaneously, some major research centers, such as the Cleveland Clinic, ended programs aimed at discovering new diagnostic methods.
Financial Repercussions of the SCOTUS Ruling
“In essence, in the four years following Mayo, investment in disease diagnostic technologies was nearly $9.3 billion dollars lower than it would have been absent Mayo,” wrote A. Sasha Hoyt, in her analysis of financial repercussions caused by the loss of venture capital investment in new medical laboratory diagnostics. Hoyt is an incoming associate and judicial extern at Finnegan, Henderson, Farabow, Garrett and Dunner, LLP in Washington DC.
“However,” she added, “it is important to note that the yearly investment totals for disease diagnostic technologies have generally increased in the years following Mayo—but it has increased at a lower rate compared to all other industries.”
Shahrokh Falati, PhD, JD, director of the Patent Law Clinic at New York Law School, maintains that the Supreme Court-created exceptions to existing patent law have damaged America’s standing as a leader in new technology development and commercialization.
“The US Supreme Court effectively redefined the scope of patent eligible subject matter when it decided Mayo. This decision focused on medical diagnostic technology and has had a profound effect on the biotechnology and personalized medicine industries in the United States …,” he wrote in the North Carolina Journal of Law and Technology.
Precision Medicine at Risk without Intellectual Property Protection
Elizabeth O’Day, PhD, CEO and founder of Olaris, Inc., a precision medicine company, has advocated for reform of Section 101. In an Olaris blog post, she argues that reform should provide intellectual property protection for therapeutic companies that develop biomarkers and algorithms used in precision medicine.
“We have the omic technologies (genomic, proteomic, metabolomic, etc.) and analytical tools needed to uncover biomarkers that could dramatically enhance our ability to detect and treat disease,” O’Day wrote. “Let’s reform Section 101 so that these breakthrough products have the opportunity to reach the people that need them.”
In, “CMS Cuts BRCA Price by 49% in Response to Competition,” Dark Daily’s sister publication, The Dark Report, highlighted the negative consequences the Mayo decision had on the clinical laboratory diagnostic testing industry.
US Senators Urge Patent Reform
While Congress has not yet stepped in to restore patent protections for diagnostics companies, key senators have been working toward that goal. Last year, US Senators Christopher Coons, Tom Cotton, Thom Tillis, and Mazie Hirono sent a letter to Drew Hirshfeld, director of the United States Patent and Trademark Office, urging him to support patent reform, which has yet to pass Congress despite Senate hearings and draft legislation.
“It is past time that Congress act to address this issue,” they wrote. “To assist us as we consider what legislative action should be taken to reform our eligibility laws, we ask that you publish a request for information on the current state of patent eligibility jurisprudence in the United States, evaluate the responses, and provide us with a detailed summary of your findings.” That letter went to Hirshfeld on March 5, 2021, with a request for findings no later than March 5, 2022.
For now, patent reform appears to be locked in uncertainty, which means SCOTUS’ decision that altered patent law affecting the biotech industry may continue to hamper development of new diagnostic tests as well as the current supply of at-home COVID-19 tests. Clinical laboratory leaders involved with diagnostic test developers will want to closely monitor for any changes to the Supreme Court’s ruling.
—Andrea Downing Peck
Related Information:
The Supreme Court Is Partly to Blame for the COVID-19 Test Kit Shortage
COVID-19 Rapid Test Shortages Seen Compounded by Slow Federal Action
Why Pharma, Private Equity Want to Reshape Lab Industry
Drugstores Struggle to Keep COVID At-Home Tests in Stock as Omicron Rages Across US
Mayo Collaborative Services, DBA, Mayo Medical Laboratories, et al. v. Prometheus Laboratories, Inc.
Patent Eligibility of Disease Diagnosis
