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MD Labs to Pay up to $16M to Resolve Allegations of False Claims for Urine Drug Testing

NEW YORK ─ The US Department of Justice said on Wednesday that MD Labs and its owners have agreed to resolve allegations about the submission of false claims for payment from Medicare, Medicaid, and other federal healthcare programs for unnecessary urine drug testing.

Under the terms of the settlement agreement, Reno, Nevada-based MD Labs and its owners and cofounders — Denis Grizelj and Matthew Rutledge — will pay the government and various states no less than $11.6 million and up to $16 million, depending on the clinical laboratory's financial circumstances over time, said the US Attorney’s Office for the District of Massachusetts.

MD Labs, Grizelj, and Rutledge admitted that between 2015 and 2019, the clinical laboratory regularly billed federal healthcare programs for medically unnecessary urine drug testing, the DOJ said.

Specifically, MD Labs, also known as MD Spine Solutions, billed federal healthcare programs for two types of urine drug testing — presumptive testing, which is relatively inexpensive and quickly provides qualitative results, and confirmatory testing, which is expensive and designed to confirm quantitatively the results of presumptive urine drug testing, DOJ said.

MD Labs performed both types of tests at approximately the same time and then simultaneously submitted the results to healthcare providers, DOJ added.

The defendants knew that doctors would not review presumptive urine drug test results when they already had more precise confirmatory urine drug test results, the DOJ said, adding the clinical lab and its cofounders knew that absent a presumptive urine drug test result, there was often nothing to confirm, and so there was no basis to bill for a confirmatory urine drug test result.

The settlement resolves allegations in a lawsuit filed by a whistleblower under the qui tam provisions of the False Claims Act, which allow private parties to bring suit on behalf of the government and share in any recovery.

DOJ said it previously reached a $1 million settlement to resolve allegations against Reno-based Nevada Advanced Pain Specialists, which used MD Labs for urine drug testing.