News, Analysis, Trends, Management Innovations for
Clinical Laboratories and Pathology Groups

Hosted by Robert Michel

News, Analysis, Trends, Management Innovations for
Clinical Laboratories and Pathology Groups

Hosted by Robert Michel
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Could McKesson Settlement Set a Precedent That Would Require Clinical Laboratories to Track Physician Test Ordering?

McKesson agreed to pay a $150 million settlement for not reporting suspicious opioid orders and this case establishes a precedent that could ensnare other providers

In today’s world of the Internet-of-Things, it is becoming easier to collect data on every purchase made by individuals and companies. That ability to track the actions of consumers and commercial business has not escaped the notice of law enforcement and regulatory authorities. For example, at some future point, it could be that regulators would want to access data held by clinical laboratories on the test ordering patterns of their client physicians.

A recent ruling by the US Department of Justice (DOJ) in a case involving McKesson Corp. (NYSE:MCK), may set a precedent that could eventually be cause for concern for medical laboratories that work with physicians who may be ordering more tests than are considered medically necessary under current regulations.

McKesson is a retail distributor of pharmaceuticals, and provider of health information and care management technologies and medical supplies. In a settlement with the DOJ, McKesson agreed to pay a record $150 million in civil penalties, as well as a staggered suspension of sales of controlled substances for a period of time from distribution centers in Colorado, Ohio, Florida, and Michigan, for alleged violations of the Controlled Substances Act (CSA). (more…)

Health Diagnostic Laboratory Puts Itself Up for Sale as Virginia Medical Lab Company Solicits Bids for Auction

HDL also got approval to question executives from UnitedHealthcare in court over unpaid claims, its third dispute with a health insurance company

Following a string of major setbacks, Health Diagnostic Laboratory (HDL) of Richmond, Virginia, put itself up for sale last week. This action comes after HDL’s announcement in April that it would pay more than $100 million to settle charges with federal investigators that it violated the False Claims Act. Then, early last month, the clinical laboratory company filed for bankruptcy protection.

On Tuesday, July 14, U.S. Bankruptcy Court Judge Kevin R. Huennekens approved HDL’s request to put itself up for sale through a court-monitored auction, the Richmond Times-Dispatch reported. No potential buyer has been named, but the clinical laboratory company has businesses that are interested in acquiring HDL, the Times-Dispatch added. (more…)

Health Diagnostic Laboratory and Singulex to Pay $48.5M to Settle Fraud Charges Involving Kickbacks and Unnecessary Testing as Feds Sue Two More Medical Labs and Three Executives on Similar Charges

Under the DOJ’s settlement agreement, HDL may need to pay as much as $100 million, according to a published report

Health Diagnostics Laboratory Inc. (HDL), of Richmond, Virginia, and Singulex Inc., of Alameda, California, agreed to pay $48.5 million to settle charges that they violated the False Claims Act, the Department of Justice (DOJ) announced Thursday.

According to the DOJ, the labs violated the Anti-Kickback Statute by paying physicians in exchange for patient referrals, in addition to billing federal health care programs for medically unnecessary testing. Pathologists, medical laboratory scientists, and clinical laboratory directors have watched this case closely since it became public knowledge last fall.

Other Clinical Laboratories and Lab Executives Face Federal Lawsuits (more…)

Despite Passage of New Law on CLIA enforcement, Ohio State University Settles with CMS Agrees to Pay $268,000, and Names New Clinical Laboratory Medical Director

Medical laboratory continues to operate, retains its CLIA certificate, and maintains that the PT violations at heart of CMS case were inadvertent

One nationally prominent clinical laboratory organization closed its chapter in the ongoing story of CLIA enforcement of the regulations governing the inadvertent referral of proficiency testing specimens. But this chapter ended with an unexpected twist for the Ohio State University Wexner Medical Center (OSUWMC), which was given severe sanctions by officials of the Centers for Medicare & Medicaid Services (CMS), despite recent enactment of a new federal law on the subject of enforcement of CLIA proficiency testing errors.

The settlement between OSUWMC and CMS was announced on January 16. It calls for OSUWMC to:

  • Appoint a new medical director for the clinical laboratory,
  • Pay $268,000, and
  • Provide additional training to the medical laboratory staff in proficiency testing (PT).

New Medical Director Named at OSUWMC’s Clinical Laboratory

OSU named Daniel Sedmak, M.D., to the position of medical director of the clinical laboratory, as part of this resolution with federal officials who administer the Clinical Laboratory Improvement Amendments (CLIA). Sedmak is currently the Chair of the OSU College of Medicine, Department of Pathology and a professor of pathology.


Last month, Ohio State University Wexner Medical Center issued a press release stating that it had resolved pending sanctions assessed against its clinical laboratory by the Centers for Medicare & Medicaid Services for violations of CLIA requirements, including the inadvertent referral of proficiency testing specimens. (Photo by


California’s Medi-Cal Program May Be Close to a $241 Million Settlement with Nation’s Largest Clinical Pathology Laboratory Company

Quest Diagnostics Incorporated Discloses Facts About Negotiations With Medi-Cal Officials to Resolve Claims Associated with Discounted Medical Laboratory Prices

In California, Quest Diagnostics Incorporated (NYSE: DGX) and several other pathology testing laboratories, including Laboratory Corporation of America (NYSE: LH), have found themselves caught in the twin jaws of a regulatory vice. At issue is the long-standing practice in the state of clinical laboratories offering discounted prices for medical laboratory tests that are less than prices paid by California’s Medi-Cal program.

One jaw of the vice is a high-profile whistleblower lawsuit that was filed in 2005, and unsealed by then-Attorney General Jerry Brown in April 2009. The suit claims that seven clinical laboratory companies violated state law over a 15-year period by charging certain customers less for medical laboratory tests than what the seven lab companies billed Medi-Cal, the state’s Medicaid program. The suit alleges that the Medi-Cal program was overcharged by hundreds of millions of dollars from medical laboratory test claims submitted by the defendant lab companies during this time.