Attention Clinical Laboratories: You Can’t Make the Doctor the Fall Guy Anymore

On June 9, 2017, U.S. District Judge Reggie B. Walton (D.C.) denied a clinical laboratory defendant’s motion to dismiss a whistleblower’s False Claims Act case. The Court flatly rejected the lab’s attempt to avoid liability by arguing the doctor, not the lab, determines the medical necessity of a particular test. The court found, instead, that the lab has an independent duty to ensure that the tests it performs and seeks payment for are medically necessary. The Court’s ruling was based, in large part, on the certification of medical necessity submitted by the lab on claims forms such as the CMS-1500.

In United States of America, et al. ex rel. Tina D. Groat v. Boston Heart Diagnostics Corp., Dr. Groat, National Medical Director of Women’s Health and Genetics at United Healthcare, alleged that Boston Heart Diagnostics Corporation (“Boston Heart”) performed various genetic and non-genetic tests that were not medically necessary for particular patients.  Dr. Groat alleged that Boston Heart’s marketing of tests that screened for cardiac-related issues and predicted future cardiac risk resulted in the submission of false claims for tests performed on patients with no history or current known risk or symptoms of having a cardiac problem.  Despite the lack of medical necessity, Boston Heart completed and submitted CMS-1500 forms and sought Government reimbursement for the tests performed.

As part of their marketing efforts, labs frequently supply doctors with pre-printed test requisition forms. Doctors then fill out the forms and send them to a lab with the patient’s sample (i.e., blood) to be tested. Lab providers (such as Boston Heart) must complete and submit a CMS-1500 form to get reimbursed for the services provided. This form requires the entity submitting the claim, whether a “physician or supplier,” to certify the medical necessity of the services. CMS-1500, p.2 (Emphasis added).

In finding that Boston Heart, the lab submitting the claim, was responsible for certifying the medical necessity of the tests at issue, the Court focused on the plain language of the Medicare claim form. The CMS-1500 requires the submitting physician or supplier (i.e. the lab) to complete the required data fields and certification. The Court rejected the defendant’s attempt to argue that Medicare regulations related to maintenance of documentation regarding medical necessity, 42 C.F.R. §410.32(d)(2), shifts responsibility to the patient’s physician, finding instead that the regulation requires both the doctor and lab to maintain records. The Court also noted that the lab’s independent obligation to determine medical necessity is particularly appropriate where the lab created the requisition forms as part of its marketing activities, and the lab – not the physician – was billing the Government for the tests at issue.

This important ruling will have a real-life impact on healthcare fraud enforcement efforts in the laboratory arena. Service providers are on notice that they will be held accountable for the certifications they submit to the Government in order to receive payment. Labs can no longer dodge FCA liability by pointing to medical necessity determinations which appear to have been made by or in the name of a patient’s treating physician. The lab bears primary responsibility for the truthfulness of medical necessity certifications that are made on the face of the CMS-1500 form. The Government relies on the truthfulness of these certifications in making over $7 billion in Medicare Part B payments to clinical labs annually (FYE 2015).