Bristol Labs: Choosing the Drug Test by the Patient’s Insurance

Bristol Labs billed $14,278,340 for medically unnecessary urine drug screens, according to the Justice Department’s account of the criminal trial evidence. The Bristol Labs fraud case turned on choosing tests by the patient’s insurance. Doctors ordered drug testing, but the laboratory’s operators decided which tests patients received. Insured patients got an extra test the operators knew was unnecessary. The doctor’s order gave the testing its medical appearance while the operators made the decision that generated the bill.

Bristol Labs Chose the Test After the Doctor Ordered It

Bristol Laboratories processed urine drug tests for the operators’ addiction clinic and other referring doctors. The Fourth Circuit’s opinion describing the criminal trial recounts how the operators controlled both businesses and determined the type and frequency of testing. The referring doctors’ orders did not specify which type of test to perform.

The Justice Department’s account of the trial evidence describes how the business developed around a Suboxone practice in Bristol, Virginia. The physician treated addiction with medication, accepted cash for appointments and required a drug screen at every weekly visit. His office occupied the suite next to Bristol Labs in the same building. He sent all his patients to the laboratory.

Cash at the clinic did not mean cash at the laboratory. Patients could pay for the appointment themselves while Medicare, Medicaid or private insurance paid for their drug testing. That split put an insurance claim behind a treatment visit the patient had already paid for.

The operators later opened their own addiction practice in Gate City, Virginia, called Mountain Empire Medical Care. According to the trial evidence described by the department, they installed a nearly identical testing protocol there. The arrangement could be repeated because the choice of test followed a business rule: whether somebody else would pay.

Why Did Insured Patients Get Two Tests?

At Bristol Labs, insured patients received two tests each week while self-pay patients generally received one quick cup test, according to the Fourth Circuit’s account of the criminal trial. The laboratory performed the basic quick cup test and a more sophisticated analyzer test. Insurance determined who received the additional test.

The Justice Department’s trial account puts the self-pay quick cup at $25. It also describes a further confirmation test sent to an outside laboratory in Denver after the in-house analyzer screen. That trial account puts weekly bills between $120 and $1,800 for the testing, while the insured patients paid nothing out of pocket. Patients paid cash to see the doctor while their insurance paid for tests he did not use to direct care.

The Fourth Circuit supplies a detail that a biller would recognize immediately: Bristol Labs billed insurers for the analyzer test but did not bill them for the basic test. The court said that omission suggested the operators did not want insurers to know patients were receiving both. The claim showed the expensive test. It left the cheaper test out of sight.

Insured patients could not choose to receive only the basic test, and they received additional testing even when they agreed with the initial result. The court also described the operators pressing referring doctors for more frequent testing. Both decisions increased the amount of testing the laboratory could bill.

The payment structure helps explain the incentive. For covered Medicare laboratory services paid under the clinical laboratory fee schedule, MedPAC’s Medicare payment guide explains that patients have no cost sharing. The ordering clinician does not bear the laboratory charge, and the laboratory earns revenue from the tests. At Bristol, the criminal findings show the operators using that separation to sell additional testing to insurers without a corresponding medical need.

When Are Toxicology Tests Unnecessary?

The Fourth Circuit’s opinion describes the trial court’s finding that the extra weekly tests served no patient need and that the operators knew it. They hid that fact when billing. Evidence also showed that they knew at least one referring doctor’s weekly results were not used in treatment.

A clinical review helps explain what was missing from that process. The Journal of Family Practice’s 2021 article Urine Drug Screening: A Guide to Monitoring Tx With Controlled Substances describes test selection as a decision about the clinical question, cost, urgency and what the result will be used to decide.

The review describes immunoassay screening as fast and comparatively inexpensive, but subject to false-positive and false-negative results. Liquid chromatography-mass spectrometry can provide more specific confirmation, at greater cost and with a longer wait. The clinical question gives that extra testing its purpose.

In its discussion of addiction treatment, the review connects the frequency of visits and testing to changes in the patient’s substance use. It also describes clinics separating specimen collection from the decision to send a sample for laboratory testing:

That gives a clinic insider a more useful comparison than the price of a test alone. The result has a purpose in treatment, and the testing decision responds to the patient. Bristol’s operators instead made coverage the reason for additional testing. The court found that the expensive test kept coming even when patients agreed with the basic result.

What the Criminal Case Shows About the Claims

The Fourth Circuit’s opinion recounts the trial court’s finding that the operators knowingly billed for unnecessary tests and concealed that fact from insurers. The appeals court explained that insurers would not have paid for the additional tests had they known those tests were unnecessary.

The Justice Department’s indictment announcement alleged that Mountain Empire required weekly drug screening as a condition of obtaining a Suboxone prescription. It also alleged that a Bristol Labs employee managed the clinic office and collected specimens. The laboratory’s involvement reached into the clinic where the order began.

The indictment alleged that Mountain Empire’s physician, an ear, nose and throat specialist, received $1,400 per day regardless of how much work she did or how many patients she saw. It said that pay depended on the income from her weekly testing orders at Bristol Labs. The indictment included a charge of offering or paying a kickback.

The earlier indictment listed what insurers were billed: it alleged bills of up to $2,000 for each in-house urine drug screen and up to $1,125 for each confirmation sent to an outside laboratory. Insured patients paid nothing out of pocket for either test.

A judge convicted the laboratory’s operators of health care fraud and conspiracy after a trial, as the department’s account reports. The trial evidence identified Virginia Medicaid, TennCare, Medicare and private insurers as the payers billed for unnecessary screens.

The operators argued that the laboratory was following physicians’ orders. The Fourth Circuit found that they determined what those orders would be. It also rejected their argument that they had billed only for tests actually performed on real patients under real orders. The wrongdoing lay in creating unnecessary testing and concealing its lack of medical purpose to get paid.

For someone inside a healthcare business, this is the useful part of the criminal findings. A specimen can be collected, a test can run and a result can be produced, while the decision that put the test into motion remains the fraud.

What Evidence Is Needed to Prove Fraud?

Our whistleblower experts connect the testing decisions an insider knows to the claims the government paid. In a case like Bristol’s, we examine who directed the extra testing, how the clinic used the results and what the insurer could see. The laboratory’s results and billing records can tell different stories.

Bristol’s doctors’ orders led back to the laboratory operators, who controlled their content, according to the Fourth Circuit’s opinion. The unbilled basic test matters for the same reason: the laboratory’s internal record can show testing that the insurer’s claim never reveals. An employee who understands either decision may know why the patient record and the bill tell different stories.

A separate civil case shows how an ordering protocol can generate unnecessary volume. In its Precision Toxicology settlement announcement, the Justice Department alleged that custom profiles operated as standing orders, producing large numbers of urine drug tests without an individual assessment of each patient’s needs. Bristol’s criminal findings concerned a different device, insurance-based selection, but both accounts put the decision before the test at the center of the conduct.

We build a civil whistleblower case with the insider who knows how the business made those decisions. A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers.

You Know Who Chose the Test

If your clinic or laboratory gives insured patients extra tests because their coverage will pay, speak to one of our Whistleblower Experts about who chose the test. We bring in laboratory fraud whistleblower lawyers who understand medical-necessity disputes and stay beside you to build your strongest laboratory fraud whistleblower case.