Allegiance and AMS: Paid by the Specimen, Tested Again and Again

In the Allegiance and AMS laboratory fraud case, the owner ran a per-specimen kickback scheme while elderly and disabled residential-care patients underwent repeated, medically unnecessary testing, according to the Justice Department’s account of court documents in the owner’s criminal case. Some orders carried the names of doctors who had never seen the patients and did not know their names were being used. For those patients, a doctor’s name stood in for a medical decision.

The government’s account identified the owner of both Allegiance Medical Laboratory and AMS Medical Laboratory as the person paying the marketers. Its account of the separate marketer trial called the owner AMS’s managing partner and described AMS in St. Louis, where blood, saliva and urine specimens became claims to Medicare and Medicaid. For someone working in laboratory sales, specimen collection or billing, the case connects familiar business records to a disturbing question: who actually decided that these patients needed these tests?

Per-Specimen Payments Fed Claims to Medicare and Medicaid

The marketer payments rewarded the flow of specimens into AMS. According to the trial documents described by federal prosecutors, the owner paid marketers 50% of the profit and, in some instances, as much as $200 for each specimen referred. AMS and its owner submitted claims for the resulting tests even though the marketers and owner knew Medicare and Medicaid would not pay for tests obtained through illegal kickbacks.

In the owner’s criminal case, court documents described his usual payment as $150 to $200 for each specimen for which Medicare and Medicaid paid the laboratories. The money went back to whoever supplied the specimens.

The marketers in the AMS trial were associated with health service businesses in the Chicago area. Prosecutors said specimens often came from health fairs at businesses and churches in Illinois and Indiana. In many instances, the marketers used doctors’ names on test orders even though those doctors did not know the patients and had never ordered the tests.

The owner supplied the laboratory connection, the marketers supplied specimens, and government healthcare programs paid the claims. The doctor whose name appeared on the order could be missing from the transaction entirely. That is how a specimen obtained for a referral payment could arrive looking like a request for medical care.

Repeated Testing of Residential-Care Patients

The residential-care patients were subjected to unnecessary testing repeatedly, according to the court documents described in the owner’s criminal case. The government identified both elderly and disabled residents. The harm reached beyond the money Medicare and Medicaid paid: people were repeatedly tested without the medical need that should have driven the work.

In a residential setting, a recurring testing schedule makes the original order and later clinical decisions especially important. The HHS Office of Inspector General’s laboratory compliance guidance calls for monitoring standing orders, giving them a fixed term and renewing them when they expire. It also calls for written confirmation from nursing homes that existing standing orders remain valid. The relevant question follows the resident through time: what supported the next test, and who reviewed the continuing need?

Clinical literature makes the frequency issue concrete. The Journal of Family Practice’s 2021 article Urine Drug Screening: A Guide to Monitoring Tx With Controlled Substances describes testing frequency tied to a patient’s risk and ongoing clinical assessment. It also describes how financial interests can encourage large panels, excessive frequency and unnecessary confirmatory testing. The useful connection here is the decision about repetition: a commercial reason to obtain another specimen can run ahead of a clinical reason to test it.

For a facility employee, that distinction can live in the gap between a collection schedule and a patient’s chart. For a laboratory employee, it can appear between what the referral source sends and what the laboratory repeatedly performs and bills. We examine those decisions together, including who kept the testing going and who benefited from each paid claim.

What Evidence Is Needed to Prove Fraud?

In a case involving paid specimen referrals, our experts connect the order and patient-specific reason for testing to the work performed, the claim, the reimbursement and the marketer’s payment. The Allegiance and AMS accounts add another question: whether the doctor named on the order knew anything about it.

The industry’s division of work explains why those answers can sit in different places. The treating clinician orders a diagnostic test, the laboratory performs and bills for it, and the payer processes the claim. Under Medicare’s documentation requirements, the doctor’s chart holds the reason for the test. The lab keeps what it was sent and records showing that its claim matches that information.

A requisition identifies the requested work. The patient’s chart supplies the clinical reason. The laboratory’s testing records and results show what was performed, while the claim and payment records show what the laboratory sought and received. Marketer agreements and payment records connect that business to the people who brought it in. We use those connections to understand how an order became a paid test and why money went back to the referral source.

Knowledge mattered in the AMS trial. Prosecutors expressly described the participants as knowing the programs would not pay for kickback-generated tests. The use of a doctor’s name without that doctor’s knowledge goes directly to how the order was created. An insider who knows who supplied the name, selected the tests or approved the payment can explain a decision that the claim alone does not show.

The Jury’s Decision

On April 2, 2019, a federal jury convicted the three marketers of conspiring to pay illegal kickbacks and commit health care fraud, as well as health care fraud counts. The Justice Department’s trial account tied their work to specimen referrals, claims to Medicare and Medicaid, and orders using doctors’ names without their knowledge.

Do Doctors Get Kickbacks for Ordering Tests?

Whistleblowers in other laboratory cases have alleged that doctors received financial incentives for referrals. In the Allegiance and AMS accounts, the government identified marketers as the kickback recipients and described doctors whose names were used without their knowledge. The recipient of the money and the person named on the order can be different people.

In a complaint concerning Surgery Partners and Logan Labs, a whistleblower alleged that physicians’ incentive compensation depended partly on profits from ancillary services, including the laboratory.

In its civil settlement announced in April 2023, Genotox Laboratories admitted offering custom profiles that let providers preselect tests for all or nearly all patients, generally in the highest reimbursement categories.

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

You Know Why the Specimens Kept Coming

If you saw names placed on orders, repeated collections or payments tied to specimens, tell our whistleblower experts how the arrangement worked. We build your strongest laboratory fraud whistleblower case with you and bring in laboratory fraud whistleblower lawyers who understand referral payments and medical-necessity evidence. We stay beside you as the clinical records, claims and money tell the full story.