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Kentucky Testing Firm, Lab to Pay $1.7M to Settle False Claims Act Allegations

NEW YORK – Blue Waters Assessment and Testing Services and VerraLab JA have agreed to collectively pay more than $1.7 million to settle civil allegations that they improperly billed urine drug tests to Medicare and Kentucky Medicaid, the US Department of Justice said Tuesday.

Both Blue Waters and VerraLab, doing business as BioTap Medical, perform urine drug tests for the family court system.

According to the DOJ, Medicare and Medicaid pay for lab tests for diagnostic or treatment purposes but not to satisfy court orders. The DOJ alleged that Blue Waters sent urine specimens from patients ordered to provide them as part of their court cases to BioTap, who then billed Medicare and Kentucky Medicaid after running the tests, in violation of the federal False Claims Act.

Louisville, Kentucky-based BioTap billed the two health programs knowing it was doing so improperly and was paid for the services, the federal government further said. BioTap has agreed to pay about $1.5 million to resolve the allegations against it, while Lexington, Kentucky-based BATS and its owner, David Waters, have agreed to pay $250,000.

The settlements resolve a lawsuit brought by two private individuals under the qui tam provisions of the False Claims Act. The individuals will receive $295,000 from the settlements, the US attorney's office said.