Accu Reference: Half the Lab’s Profit for the Referrals

The Accu Reference laboratory kickbacks case centered on a deal to share laboratory profits with the people directing pain-clinic urine referrals, according to the Department of Justice’s account of a physician’s criminal trial. The lab deducted its testing overhead, then gave half the profit to clinic owners and executives. The people choosing where those specimens went shared in the proceeds.

The arrangement reached across the business: a laboratory owner, a marketing agent, clinic executives and physician owners. The clinic’s finance officer negotiated the payment formula and received a personal share. The criminal accounts show both the referral deal and a second deception inside it: clinic executives concealed the full payments from the physicians sharing in them.

How the Urine Specimens Became a Revenue Stream

Accu Reference received the urine-testing business of Advanced Pain Management Services, which operated as American Spine Center. In the Department of Justice’s account of the criminal trial evidence, the practice had offices in Maryland and New Jersey and required patients prescribed controlled substances for pain relief to provide urine specimens. Testing monitored the levels of pain medication or other narcotics in their bodies.

The laboratory’s marketing agent proposed the referral arrangement to the clinic’s chief executive and chief financial officer. The physician owners approved it, and the clinic began sending all its patients’ urine specimens to Accu Reference.

The criminal trial evidence described between 700 and 1,300 patient specimens referred each month from April 2011 through July 2012. Accu Reference received approximately $4.4 million from Medicare and private insurers for testing the specimens. After testing overhead, the profits were divided between the laboratory and the clinic participants. The marketing agent also received a share of the laboratory’s profits.

The same trial evidence showed that the laboratory owner caused his companies to make the payments to the clinic participants. The arrangement also extended to back braces supplied by another company he controlled.

Do Doctors Get Kickbacks for Ordering Tests?

Yes. In this criminal case, the Department of Justice described trial evidence that physician owners received payments for directing urine specimens to Accu Reference. Clinic executives and the laboratory’s marketer also participated in the arrangement. The money reached several people who could help secure or retain the testing business.

The physician whose trial the department described was convicted on charges arising from the kickback scheme. The same announcement records guilty pleas by the laboratory owner and the marketing agent to conspiring to violate the Anti-Kickback Act, and by the clinic’s finance officer to violating that law.

The decision about where to send a patient’s specimen had become a decision about who would share the laboratory’s profit. That is the conflict an insider in health care sales, clinic finance or laboratory billing can recognize: the referral source had a financial stake in the destination of the test.

Why Pain-Clinic Urine Testing Was Valuable

Pain-clinic urine testing serves a recurring clinical purpose: monitoring patients taking prescribed pain medication. The clinic already required those specimens. A laboratory that secured the clinic’s business gained access to that recurring work.

The 2014 Pain Physician ethics paper Ethical Perspectives on Urine Drug Screening for Pain Physicians describes urine testing as a way to monitor adherence to prescribed medication and detect other drug use. It also identifies the financial pressure surrounding that work:

The paper frames that as a concern about incentives. In the Accu Reference criminal case, the incentive was an agreed share of the profit on the referred specimens.

The division of work matters commercially. Under Medicare’s ordering rules, the treating practitioner orders the test and holds the medical documentation supporting its need. The laboratory performs the test and submits the claim. The clinician controls access to the work that the laboratory bills.

The Finance Officer Negotiated the Deal and Took a Share

In his plea agreement, the clinic’s chief financial officer admitted negotiating the profit-sharing arrangement, according to the Department of Justice’s December 15, 2014 announcement. His plea agreement described a group of central Maryland pain clinics generating hundreds of urine samples each month and sending them to an outside laboratory.

The finance officer and others decided to move that testing business to a New Jersey laboratory after learning it would pay a kickback for each specimen. He negotiated a payment based on the laboratory’s profit after expenses.

According to his plea agreement, the laboratory paid the clinic group $1,376,540 in kickbacks between July 2011 and July 2012. The finance officer personally received approximately $459,245. The agreement identifies private insurers, Medicare and the Federal Employees Health Benefit Program as sources of reimbursement for the tests. Medicare and federal employees’ insurance helped fund the testing business from which these private payments came.

The government’s separate criminal account of the laboratory owner and marketer describes what the finance officer told the physician owners: the deal paid $35 per specimen cup. That was substantially less than the laboratory would actually pay under the profit-sharing agreement. The account says the laboratory owner did not know about the finance officer’s lower representation to the physicians.

The criminal trial evidence showed that the chief executive and finance officer deceived the physician owners about the full payments and retained more than 60% for themselves. The physician owners each received approximately $240,000. Even the people sharing the kickbacks were being shortchanged.

For someone inside clinic finance, that is a concrete distinction. The laboratory’s payment formula, the amount reported to the physician owners and the money distributed to each participant told different parts of the story. Knowing how the payment was calculated could expose what a stated per-cup rate concealed.

Accu Reference’s Separate Specimen Validity Testing Settlement

Accu Reference Medical Lab entered a separate settlement with the Department of Health and Human Services Office of Inspector General on January 20, 2022. The Linden, New Jersey laboratory agreed to pay $598,115 to resolve allegations that it billed Medicare for specimen validity testing alongside urine drug testing when specimen validity testing was a noncovered service.

The Same Incentive in Other Laboratory Cases

Other laboratory cases show referral value moving through free supplies or compensation tied to laboratory profits. In the civil case against Millennium Health, the government alleged that the laboratory supplied free point-of-care test cups to physicians who agreed to refer testing. The benefit reached the referring practice through an item it used in its work.

What Clinic and Laboratory Insiders Can See

The Accu Reference case connects work usually seen from different desks: a marketer’s offer, an executive’s referral decision, a laboratory’s collections and the payments to clinic participants. The finance officer’s plea shows why knowing the formula matters. The criminal trial evidence shows why knowing who approved the arrangement matters.

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

You Know How the Referral Deal Paid

If you know the profit split, the payments to a referring clinic or the account given to its physician owners, speak with our whistleblower experts about how the referral deal paid. We build your laboratory kickback whistleblower case with you, bring in laboratory fraud whistleblower lawyers who understand referral payments and government healthcare billing, and stay beside you through the case.