Elite Lab Services: Billing Medicare for Miles Nobody Drove

In the Elite Lab Services settlement announced in 2016, the company and its owners agreed to pay $3.75 million over false Medicare mileage claims they admitted submitting. The employee’s complaint described a mobile laboratory with one set of routes for the people drawing blood and another in the billing system. Facilities that had stopped using Elite allegedly kept generating mileage charges. The customer had left, but the trip was still on the bill.

The whistleblower alleged inflated mileage from approximately 2010 through 2014. Her complaint described Elite as a Tyler, Texas laboratory serving nursing homes and other inpatient facilities without their own laboratories. Its phlebotomists traveled to patients to collect blood, then transported the specimens for testing.

Medicare’s specimen collection fee and travel allowance are separate from the payment for the laboratory test. That puts part of the health care bill on the road, before a sample reaches the testing bench. In Elite’s case, the admitted false claims concerned the distance employees drove to do that work.

How the Mileage Claims Were Inflated

The whistleblower alleged that Elite’s managers programmed inflated routes into CyberLAB, the laboratory information system, and passed the resulting mileage into Telcorp, its billing software. CyberLAB divided route mileage among blood draws. Recording fewer draws meant assigning more miles to each Medicare draw, even without adding distance to the route.

According to the complaint, the phlebotomy supervisor planned daily routes around the facilities needing service and the work employees could complete during a shift. Management entered different routes into CyberLAB, including convoluted journeys that crossed state lines and could not be completed in a single shift. The complaint alleged that only the owner, chief operating officer and vice president of operations had the administrative access needed to enter the route and mileage data.

In the whistleblower’s telling, the billing calculation began with a route the employee was never assigned to drive.

One Blood Draw Triggered an Entire Route

The complaint alleged that a requested blood draw at any facility on a programmed route triggered mileage for the whole route, whether anyone drove all of it or not. The system allegedly treated a request from one stop as a reason to charge for every stop.

Canceled contracts made that design particularly revealing. According to the complaint, thirty-five facilities owned by the same corporation canceled their contracts with Elite in December 2010. They allegedly remained on the programmed routes for the next three years. Whenever another facility on a shared route requested a draw, Medicare was billed as though a phlebotomist had also visited the former customer.

Those facilities no longer needed Elite’s collection service. In the whistleblower’s account, their addresses still had a job in the billing system: making the route longer.

A Courier’s Journey Became a Phlebotomist’s Trip

The complaint also alleged that Elite billed routes as though its phlebotomists started and ended each day at the Tyler laboratory. Employees living in outlying service areas instead received assignments at home, visited nearby facilities and left specimens at a local Elite office for transport by courier.

The Arkansas example made the difference concrete. The whistleblower alleged that none of the phlebotomists who drew blood in Arkansas drove those samples back to Tyler. Couriers collected the specimens from the Texarkana office. Yet the programmed routes treated the return journey as one each phlebotomist had made.

The complaint described a similar device for urgent testing performed by a local reference laboratory. A phlebotomist could collect a sample near home and take it to that nearby laboratory, while Elite allegedly billed as though the employee had traveled from Tyler and brought the sample back there. Where the sample was tested mattered because the billed journey could end at a laboratory the sample never reached.

More Miles and Fewer Blood Draws

The whistleblower alleged that the chief operating officer and vice president of operations also added miles manually after the route calculations. The complaint put the scale plainly:

The same passage alleged that the managers reduced the recorded number of venipunctures, or blood draws, increasing the mileage assigned to each Medicare draw. They allegedly changed both sides of the calculation: more distance to charge for, fewer draws to share it across.

Emergency collections offered another alleged way to multiply a trip. The complaint said a phlebotomist might draw blood from several patients during one visit, while Elite submitted mileage as though separate visits had occurred. In each version, the claim described more travel than the employee’s work required or involved.

What Elite Lab Services Admitted

Elite and its owners admitted submitting false Medicare claims with mileage calculations beyond the miles employees actually drove. That admission was part of the civil settlement, as the Justice Department’s announcement states. Medicare’s public funds paid for travel that never happened.

A former billing supervisor brought the qui tam case under the False Claims Act, and the United States joined it for settlement. Her work had made her familiar with the claims Elite sent to Medicare.

Mobile Laboratory Mileage Is a Recurring Fraud Pattern

Travel billing has produced laboratory fraud cases beyond Elite. In a 1997 settlement involving Laboratory Corporation of America, the government alleged overstated mileage by phlebotomists driving personal vehicles to homebound and nursing home patients. The travel to collect the sample was itself the subject of the claim.

A court later ordered BestCare Laboratory Services to pay for fraud involving inflated laboratory technician travel allowances. These healthcare fraud cases put a part of the laboratory business that happens outside the building at the center of the government’s bill. A person who knows the collection routes can understand a false mileage claim from the work on the road, without needing to explain the testing equipment inside the lab.

What Evidence Is Needed to Prove Fraud?

In Elite’s case, the complaint pointed to a direct comparison between employee reimbursement records and Medicare mileage claims: the company allegedly kept the actual mileage employees submitted for reimbursement at the end of each pay period.

According to the whistleblower, management knew about those reimbursement records while also controlling the routes used to bill Medicare. The company had a record of the miles it paid its workers to drive. The allegation was that it charged the government for a different journey.

The Whistleblower’s Share of the Recovery

The Elite settlement provided a 21% share of the government’s recovery for the former employee. Her knowledge came from inside the billing operation, where the collection work and the Medicare claims met.

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers.

You Know Which Trips Were Made

If you know why the miles billed to Medicare differ from the miles employees drove, talk with our whistleblower experts about the laboratory’s billing. We work alongside you to build the case around that difference and bring in laboratory fraud whistleblower lawyers who understand specimen collection and travel claims. From your first account of the routes through the pursuit of a recovery, we stay on your side of the table.