The Department of Justice steps beyond the law’s original focus on opioid-related lab testing fraud
An interesting aspect with enforcement of the Eliminating Kickbacks in Recovery Act of 2018 (EKRA) is the government’s willingness to go after charges tied to fraudulent COVID-19 testing.
The case U.S. vs. Malena Badon Lepetich provides a good example of this approach. A grand jury indicted Lepetich on various healthcare fraud charges last year, including that she allegedly offered to pay kickbacks for referrals of specimens for COVID-19 testing.
“The government had really only used EKRA in the context of addiction treatment space,” attorney Alexander Porter, a Partner at law firm Davis Wright Tremaine in Los Angeles, said in the latest issue of The Dark Report. “The Lepetich case shows that the government’s going to use EKRA beyond that context and go into other areas where they think that it can be useful—in particular, in the area of COVID-19 testing.”
Clinical laboratories and pathology groups should take note of this development.
Attorney Alexander Porter said EKRA enforcement now goes after fraudulent COVID-19 testing. (Photo: Davis Wright Tremaine)
Defendant Allegedly Filed $10 Million in Fraudulent Lab Claims
Lepetich was the owner of MedLogic, a clinical laboratory in Baton Rouge, La.
In addition to the fraudulent COVID-19 testing charges, she allegedly solicited and received kickbacks in exchange for referrals of urine specimens for medically unnecessary tests, according to the U.S. Department of Justice (DOJ).
EKRA Provisions Rose from the Opioid Crisis in the U.S.
EKRA is a criminal law that falls under the Communities and Patients Act, which lifted restrictions on medications for opioid treatment and sought to limit overprescribing of opioid painkillers. Originally, EKRA targeted fraudulent practices at sober homes and substance abuse treatment centers. However, the final draft of the bill added clinical laboratories to the list of providers under potential scrutiny.
At the time Congress passed EKRA, the law was primarily aimed at fraudulent activity in opioid treatment centers, including related lab testing.
Thus, the government’s use of EKRA in the COVID-19 charges against Lepetich case is newsworthy and establishes a precedent, noted Porter. He’ll speak about EKRA at the 2022 Executive War College on Laboratory and Pathology Management. The event takes place April 27-28 in New Orleans.
A contentious part of EKRA for clinical laboratories and pathology groups is that certain conduct protected under the federal Anti-Kickback Statute is treated as a criminal offense under EKRA. Some common lab practices come under that confusing designation, such as paying lab sales reps on a commission-based formula based on testing volumes they generate.
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 attorney generals for allegedly failing to deliver SARS-CoV-2 test results and/or for delivering COVID-19 test results that “were falsified or inaccurate,” according to NBC News.
Chicago-based Center for COVID Control (CCC)—an operator of 300 pop-up COVID testing sites nationwide—faces investigations from state and federal authorities amid allegations of improper procedures and business practices. The company voluntarily suspended operations in January, when the allegations first surfaced, according to a company press release.
The founders, who had no prior clinical laboratory experience, now say they have turned their attention from running the sites to handling the investigations, USA Today reported. The newspaper was the first to publicly report problems with the company and its associated lab, Doctors Clinical Laboratory (DCL), both of which have the same address in suburban Chicago.
According to USA Today, “The Center for COVID Control was incorporated in December 2020, according to Illinois state filings. The business, which describes itself as a ‘test collection marketing and management firm,’ worked closely with Doctors Clinical Lab. Regulators didn’t visit the lab for an on-site inspection until the end of September of the following year, according to the Centers for Medicare and Medicaid Services. Regulators found the lab was not reporting coronavirus test results to public health officials.”
Questionable Collection Procedures for COVID-19 Testing
An earlier USA Today story by reporter Grace Hauck described an outdoor COVID-19 collection site in Chicago run by a man operating from a small shack powered by a generator.
“As he opens the door, piles of plastic bags, apparently grouped by test type, can be seen in crates on the ground,” Hauck reported. “He encourages test-takers to scan a QR code with their phones, fill out an online form with identifying information, and write a digitally-generated string of numbers on a paper sheet inside the plastic test kit bag.”
Hauck’s story noted complaints from readers about shoddy specimen collection procedures, conflicting or errant clinical laboratory test results, and failure to receive COVID-19 results in a timely manner.
Block Club Chicago, a non-profit news site, reported on Jan. 13 that inspectors from the Centers for Medicare and Medicaid Services (CMS) had uncovered numerous instances of “non-compliance” and “deficiencies” at DCL.
CMS lab inspectors found that DCL “could not process or store PCR test samples appropriately—while it was being inundated with tests,” the news site reported. “Over an 11-day period in November, the lab received 84,436 PCR test samples; over that period, it processed and reported 43,240 test results, according to the [CMS] report.”
Specific problems included:
Inadequate staffing, training, and quality controls at the clinical laboratory.
A lack of freezers needed to store test samples.
Failure to maintain confidentiality of patient information.
Failure to label samples with identifying information.
Failure to log complaints from test recipients.
USA Today reported that the FBI executed a search warrant at the companies’ suburban Chicago offices on Jan. 22.
State Actions against Doctors Clinical Laboratory and CCC
In addition to the federal actions, state attorneys general in Minnesota and Washington State both filed lawsuits against Center for COVID Control (CCC) and Doctors Clinical Laboratory (DCL).
“When Minnesotans and people from around the country tested with these companies to keep themselves and their families safe, they trusted they would get correct [COVID-19 test] results on time,” said Minnesota Attorney General Keith Ellison in a statement announcing a lawsuit against the two companies. “I’m holding these companies accountable that sent back false or inaccurate [COVID-19 test] results, when they sent them back at all, for deceiving Minnesotans and undermining the public’s trust in testing.” (Photo copyright: Office of Minnesota Attorney General.)
Washington Attorney General Bob Ferguson filed suit in King County Superior Court on Jan. 31. “Center for COVID Control contributed to the spread of COVID-19 when it provided false negative results,” he stated in a news release. “These sham testing centers threatened the health and safety of our communities.”
On Feb. 17, Ferguson announced that the court had granted a preliminary injunction that prohibited CCC from providing testing services in the state.
NBC News reported that authorities in other states have also taken actions against the company. Oregon and Illinois launched civil investigations, while “Massachusetts and Rhode Island have issued cease and desist letters to the company, and local regulators in Washington and California shut down several of its sites for operating without a license,” the newspaper reported.
Big Money in COVID-19 Testing
USA Today reported that CCC was launched in December 2020 by Akbar Syed, 35, and Aleya Siyaj, 29, a married couple. Siyaj is listed as being CEO of CCC since June 2021, according to her LinkedIn profile.
“Doctors Clinical Lab is registered under another person’s name in state records, but federal documents and multiple former employees and business partners claimed Siyaj and Syed run the lab and Center for COVID Control,” Block Club Chicago reported.
USA Today reported that DCL received more than $124 million in federal reimbursement for COVID-19 clinical laboratory testing and treatment. The paper also described a lavish lifestyle for Syed and Siyaj, including recent purchases of a $1.36 million mansion and multiple luxury cars. Asked on social media site TikTok about the source of his wealth, Syed stated, “COVID money,” according to USA Today.
Siyaj and Syed have denied wrongdoing, stating that they are now focused on “responding and cooperating with legal probes, and to clearing our good names,” according to a statement provided to USA Today.
Regulatory Loopholes
One question about CCC and DCL is how they were able to escape regulatory scrutiny. “Some experts said unscrupulous lab operators can take advantage of a regulatory opening that allows labs to register, test, and bill before inspectors finish a CLIA certificate survey,” USA Today reported. “In other cases, investors might purchase or establish management agreements with labs and begin testing before inspectors get in to verify the lab’s reliability.”
Pathologists and clinical laboratory managers will want to continue to watch the news, as other examples of fraud and incompetence by new companies that rushed into the COVID-19 lab testing marketplace are uncovered and investigated by both state and federal regulators.
Further, some of these companies may have generated more than $1 billion in payments from public and private sources after launching testing operations in the months after the arrival of the pandemic.
As mandatory screenings for private industry workers increases, some states launch free COVID-19 testing for state employees, while engaging medical laboratories to provide such testing
Amid the SARS-CoV-2 pandemic, welcoming employees back to work is not as simple as opening the company’s doors. Businesses based in some areas of the US and Canada are being required by state and provincial governments to conduct employee COVID-19 screenings. For clinical laboratories, the increase in mandatory screening programs could mean an expanding market for employee testing programs and opportunities for lab outreach programs.
But companies and medical laboratories may also face legal and regulatory risks as workplaces reopen and people return.
For example, how do clinical laboratory managers ensure their labs have the information they need to respond to new rules and regulations, and do employers have recourse should an employee receive a COVID-19 test report with an incorrect result?
Not COVID-19 Screening Can Lead to Fines, Imprisonment
Is there existence of “new or worsening symptoms,” such as fever or chills, difficulty breathing, and cough?
Has the employee travelled outside Canada in the past 14 days?
Has the employee had close contact with other confirmed or “probable” COVID-19 cases?
A “probable” case is “a person with symptoms compatible with COVID-19 AND in whom laboratory diagnosis of COVID-19 is inconclusive,” according to a blog post by Justin P’ng, Employment and Labor Lawyer/Associate at international law firm Fasken in Toronto.
“Employers [in Ontario] must now specifically comply with the requirements of the Screening Tool and to implement such screening at any physical workplaces it operates in the province,” P’ng wrote. “Failure to comply can lead to significant penalties, including potentially fines and imprisonment under the legislation.”
It is possible the new requirements may ease Ontario workers’ minds about heading back to work during the pandemic. A Canadian workforce survey of employers and employees during July 2020 by PricewaterhouseCoopers (PwC) Canada found:
Most employers (78%) expect a return to the workplace in 2020.
Just one in five employees indicated they want to go back to the workplace full-time.
Michigan Makes Remote Work Mandatory
In the US, state rules enforced by the Michigan Occupational Safety and Health Administration (MIOSHA) require employers—for infection prevention reasons—to establish remote work programs for employees, unless it is not feasible for employees to work away from the workplace.
“The employer shall create a policy prohibiting in-person work for employees to the extent that their work activities can feasibly be completed remotely,” MIOSHA said.
Similar to the Ontario law, Michigan employers are also required to establish COVID-19 screenings. The MIOSHA rules direct employers to “conduct a daily entry self-screening protocol for all employees or contractors entering the workplace, including, at a minimum, a questionnaire covering symptoms and suspected or confirmed exposure to people with possible COVID-19, together with, if possible, a temperature screening.”
Michigan employers not in compliance with the state’s requirements for office work may be fined up to $7,000 per violation, a McDonald Hopkins Insights article noted.
Furthermore, anti-retaliation law in Michigan prohibits employers from terminating or “retaliating against” employees who oppose violation of the law or report COVID-19 “health violations,” the McDonald Hopkins Insights article added.
However, Michigan businesses may have protection under the COVID-19 Response and Reopening Liability Assurance Act. The law states a “person who acts in compliance with all federal, state, and local statutes, rules, regulations, executive orders, and agency orders related to COVID-19 that had not been denied legal effect at the time of the conduct or risk that allegedly caused harm is immune from liability for a COVID-19 claim.”
The law defines a “person” as “an individual, partnership, corporation, association, governmental entity, or other legal entity, including, but not limited to, a school, a college or university, an institution of higher education, and a nonprofit charitable organization. Person includes an employee, agent, or independent contractor of the person, regardless of whether the individual is paid or an unpaid volunteer.”
New York Launches Free RT-PCR Tests for Transit Employees
Meanwhile, in New York, free COVID-19 tests are now available on a voluntary basis to 2,000 frontline employees of the Metropolitan Transit Authority, a news release states.
“Quality COVID-19 testing is critical to helping our nation’s frontline workers do their jobs as safely as possible,” Wendi Mader, Executive Director of Employer Population Health at Quest Diagnostics, said in the news release.
New Special Report Available on COVID-19 Employee Testing Programs
As the SARS-CoV-2 pandemic progresses, laws, regulations, and rules pertaining to COVID-19 employee testing and screening will likely continue to develop—and they will vary by area and by test type—making them a challenge to interpret, track, and ensure compliance.
This exclusive report offers guidance, best practices, and insights necessary to launch and operate high quality, compliant COVID-19 employee testing programs. Clinical laboratories and employers tasked with developing and maintaining coronavirus testing programs will gain critical insights and data from this invaluable special report. (Photo copyright: Dark Intelligence Group.)
Included in the report:
Ten regulatory essentials for launching a COVID-19 testing program
Critical shortages in medical laboratory workers and supplies are yet to be offset by new applicants and improved supply chains. But there is cause for hope.
Medical laboratory scientists (aka, medical technologists) can be hard to find and retain under normal circumstances. During the current coronavirus pandemic, that’s becoming even more challenging. As demand for COVID-19 tests increases, clinical laboratories need more technologists and lab scientists with certifications, skills, and experience to perform these complex assays. But how can lab managers find, attract, and retain them?
The Johns Hopkins Coronavirus Resource Center reports that as of mid-October more than one million tests for SARS-CoV-2 were being performed daily in the US. And as flu season approaches, the pandemic appears to be intensifying. However, supply of lab technologists remains severely constrained, as it has been for a long time.
Still, qualified medical technologists (MT) and clinical laboratory scientists (CLS) are hard to find.
Demand for COVID Tests Exceeds Available Clinical Lab Applicants
“I can replace hardware and I can manage not having enough reagents, but I can’t easily replace a qualified [medical] technologist,” said David Grenache, PhD, Chief Scientific Officer at TriCore Reference Laboratories, Albuquerque, N.M., in the WSJ.
Another area where demand outstrips supply is California. Megan Crumpler, PhD, Laboratory Director, Orange County Public Health Laboratory, told the WSJ, “We are constantly scrambling for personnel, and right now we don’t have a good feel about being able to fill these vacancies, because we know there’s not a pool of applicants.”
Are Reductions in Academic Programs Responsible for Lack of Available Lab Workers?
Recent data from the US Bureau of Labor Statistics (BLS) show 337,800 clinical laboratory technologists and technicians employed by hospitals, public health, and commercial labs, with Job Outlook (projected percent change in employment) growing at 7% from 2019 to 2029. This, according to the BLS’ Occupational Outlook Handbook on Clinical Laboratory Technologists and Technicians, is “faster than average.”
“The average growth rate for all occupations is 4%,” the BLS notes.
Medical laboratories have the most staff vacancies in phlebotomy (13%) and the least openings in point-of-care (4%), according to an American Society for Clinical Pathology 2018 Vacancy Survey published in the American Journal of Clinical Pathology (AJCP).
Becker’s Hospital Review reported that “Labor shortages in [clinical] testing labs have existed for years due to factors including low recruitment, an aging workforce, and relatively low pay for [medical] lab technicians and technologists compared to that of other healthcare workers with similar education requirements.
“In 2019, the median annual salary for clinical laboratory technologists and technicians was $53,000, according to the US Bureau of Labor Statistics. The skills required for lab workers also are often specialized and not easily transferred from other fields.”
At the “root” of the problem, according to an article in Medical Technology Schools, is a decrease in available academic programs. Laboratory technologists require a Bachelor of Science (BS) degree and technicians need an associate degree or post-secondary certificate.
“(The programs) are expensive to offer, so when it comes to cuts and budgets, some of those cuts have been based on how much it costs to run them. That, and they may not have high enough enrollments,” said Lisa Cremeans, MMDS, CLS(NCA), MLS(ASCP), Clinical Assistant Professor at University of North Carolina at Chapel Hill, in the Medical Technology Schools article. (Photo copyright: University of North Carolina.)
AACC has called for federal funding of these programs, which now number 608, down from 720 programs for medical laboratory scientists in 1990.
“The pandemic has shone a spotlight on how crucial testing is to patient care. It also has revealed the weak points in our country’s [clinical laboratory] testing infrastructure, such as the fact that the US has allowed the number of laboratory training programs to diminish for years now,” said Grenache, who is also AACC President, in a news release.
Creative Staffing Strategies Clinical Labs Can Take Now
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How Some Clinical Labs are Coping with Staff and Recruitment Challenges
The Arizona Chamber Business News reported that Sonora Quest Laboratories in Tempe earlier this year launched “Operation Catapult” to help with a 60,000 COVID-19 test increase in daily test orders. The strategy involved hiring 215 employees and securing tests with the help of partners:
Meanwhile, students in the UMass Lowell (UML) medical laboratory science (MLS) program, see brighter skies ahead.
“The job outlook even before COVID-19 was so amazing,” said Dannalee Watson, a UML MLS student, in a news release. “It’s like you’re figuring out a puzzle with your patient. Then, we help the doctor make decisions.”
Such enthusiasm is refreshing and reassuring. In the end, the SARS-CoV-2 pandemic and the resultant demand for clinical laboratory testing may call more students’ attention to careers in medical laboratories and actually help to solve the lab technologist/technician shortage. We can hope.
