Enzo Biochem and Enzo Clinical Laboratories: Claim Information Altered for Reimbursement

In the Enzo Clinical Laboratories settlement, Enzo Biochem and its laboratory subsidiary agreed to pay $3.5 million to resolve allegations that employees chose diagnosis codes to get claims paid. The government said that when physicians left the codes off test orders, Enzo staff supplied codes they thought would produce reimbursement. For a laboratory billing insider, the question at the center of this case is familiar: whose diagnosis ended up on the claim?

The Justice Department announced the civil settlement on September 24, 2014. It resolved a case under the federal False Claims Act and the New York False Claims Act.

What Enzo Allegedly Changed on the Claim

Enzo employees allegedly supplied missing diagnosis codes according to their likelihood of producing payment. The government’s account starts with a physician ordering a test without providing a diagnosis code. It says employees selected and assigned codes themselves instead of returning to the physician for the missing information.

That choice matters because the diagnosis explains the medical reason for the test. A physician’s order asks the laboratory to perform work. The diagnosis information supports why the government should pay for it. The alleged shortcut joined those separate decisions inside the billing operation: the laboratory received the order, supplied the missing diagnosis and submitted the claim.

The Justice Department placed the conduct as far back as January 1, 2004, and described it as continuing through its announcement. It alleged that Enzo obtained reimbursement through this practice and described the purpose as inflating and securing payments from the Centers for Medicare & Medicaid Services.

The Diagnosis Needs Clinical Support

Medicare’s coding instructions require diagnostic information supporting the diagnosis reported on the claim. The ability to enter a code into billing software does not give the laboratory the patient’s clinical reason for needing the test.

The distinction is especially clear in the Inspector General’s laboratory compliance guidance. It tells laboratories not to create diagnosis information because it previously triggered reimbursement, automatically insert codes without receiving diagnostic information from the ordering physician or another authorized individual, or make up information for claims.

Enzo’s alleged choice put reimbursement ahead of the physician’s account of the patient’s condition. According to the government’s account, the missing information became a billing decision, and taxpayers paid claims carrying the laboratory’s chosen diagnosis.

The Requisition Was Already a Recognized Control Point

The diagnosis field on a laboratory requisition had drawn attention well before Enzo’s settlement. In Model Plan Helps Laboratories Fight Fraud, published by Laboratory Medicine in 1997, the account of the Inspector General’s model plan describes uniform requisition forms with space for the physician to document the medical necessity of each ordered test through a diagnosis code.

That places the explanation for the test at the point of ordering. In the Enzo allegations, the laboratory filled the gap later. The difference is who supplies the medical information and what drives the choice.

The article also describes written policies, employee education, audits and management responsibility as parts of the model plan. A diagnosis field sits within an operation run by people who design forms, train billing staff and decide how missing information gets handled. Those decisions can be visible to employees even when they have no part in performing the laboratory test.

A later whistleblower complaint against Vista Clinical Diagnostics alleged the same payment-driven addition of diagnosis codes, automated through computer macros.

What Evidence Is Needed to Prove Fraud?

For an altered-diagnosis claim, the useful comparison connects the physician-supplied diagnostic information with the code submitted for payment and the instructions behind the change.

The records and the insider’s explanation answer different questions. An original requisition shows what the physician supplied. The submitted claim shows what the laboratory told the payer. Someone who handled the coding may know why those accounts differ, including whether staff sought clarification or chose a diagnosis because it would help the claim get paid.

That is the knowledge our whistleblower experts work through with you. A healthcare billing employee may recognize the instruction, while a provider’s office may recognize that the diagnosis on the claim never came from its order. We connect that knowledge to the particular health care claims and the decisions that produced them.

A Whistleblower Complaint Started the Enzo Investigation

The Enzo investigation began with a qui tam complaint. The United States Attorney’s Office for the Eastern District of New York and the New York Attorney General’s Medicaid Fraud Control Unit then investigated together and reached the civil settlement. A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers.

You Know Why the Code Changed

If you saw diagnosis codes chosen to secure payment, speak to one of our Whistleblower Experts about how the codes were chosen. We build your case around the connection between the physician’s information, the laboratory’s claim and the decisions you witnessed, and bring in laboratory fraud whistleblower lawyers who understand reimbursement cases. We stay beside you as partners through the case.