Ethos Laboratories: Two Drug Tests, Whatever the First One Found

In the Ethos Laboratories settlement, the laboratory agreed to give up $6.5 million in withheld Medicare payments to resolve allegations of unnecessary urine drug testing and Foundation Pain Index testing. Ethos admitted billing for blanket drug-testing panels without individualized decisions about patients’ needs, and for some pain-index tests performed without the provider’s knowledge. For someone inside a laboratory or referring practice, the question is familiar: who decided which tests this patient needed?

Ethos Holding Corp., doing business as Ethos Laboratories, is a clinical laboratory in Newport, Kentucky. The Justice Department announced the settlement on November 8, 2024. Ethos also sold a proprietary urine test for biomarkers of chronic pain, marketed as the Foundation Pain Index.

What Ethos Admitted About Urine Drug Testing

Ethos admitted submitting claims for presumptive and definitive urine drug testing for the same patient, on the same date, using the same urine sample. From January 1, 2017, through July 15, 2024, it billed Medicare for both methods on the same substances without using the presumptive result to determine whether definitive testing was necessary.

The Justice Department described Ethos’s presumptive testing as a relatively inexpensive method that quickly produced qualitative results. Definitive testing used a more complex, expensive method that produced quantitative results. The first tells the provider whether a substance is detected; the second gives a measurement. Ethos admitted that the first result did not inform the decision to perform the second test. Medicare received both bills anyway.

The settlement agreement’s admissions also describe blanket orders under which a provider ordered the same panels for everyone in the practice, without deciding what each patient needed. In some instances, those panels included substances with positivity rates below 0.01%. A substance could almost never turn up and still remain on the panel sent through for every patient.

The payment structure made the extra claim matter. Definitive testing codes are tiered by the number of drug classes tested. Ethos admitted billing presumptive testing even when its definitive claims already reached the maximum reimbursement tier under G0483, the code for 22 or more drug classes. Medicare paid extra for the cheaper, less effective test after the definitive testing had already reached the top rate.

Why the Order Form Matters

Ethos admitted using blanket orders that selected the same panels for everyone in a practice without deciding what each patient needed. One choice on an order form could keep producing the same tests and Medicare claims across the practice.

Medicare’s Benefit Policy Manual describes an order as a treating clinician’s request for a diagnostic test for a particular patient. It also describes a conditional request: perform an additional test if the initial result reaches a value specified by that clinician. That sequence ties the next test to a result and a decision about the patient.

The laboratory’s requisition matters because it records that choice. Laboratory compliance guidance from the Department of Health and Human Services’ Office of Inspector General calls for forms that allow an independent medical-necessity decision for each test the laboratory will bill. Its standing-order provisions call for periodic monitoring, a fixed term and renewal. In Ethos’s admitted workflow, the same panels went forward without that individualized determination. Repeating the order repeated the missing decision.

The clinical literature gives this distinction substance. The Journal of Family Practice’s 2021 review, Urine Drug Screening: A Guide to Monitoring Tx With Controlled Substances, describes urine testing as a tool in treating substance use disorders and monitoring patients on chronic opioid or benzodiazepine therapy. It recommends a testing frequency based on ongoing assessment, including prior toxicology results, patient reports and prescription-monitoring information.

The review also recommends revisiting unexpected screening results through the patient’s history or confirmatory testing before changing treatment. In addiction care, it describes testing frequency changing with the patient’s progress. Those are clinical decisions that use information from the patient and the results. Ethos admitted performing definitive testing regardless of the presumptive results. A laboratory can run both tests while leaving out the decision that connects them.

The same order-form problem appears in other cases. In its civil settlement, Genotox Laboratories admitted offering custom profiles that let providers preselect tests for all or nearly all their patients, generally in the highest reimbursement categories. Choosing a profile once could generate repeated testing across the practice.

In the separate case involving Blue Waters Assessment & Testing Services, the whistleblowers’ complaint alleged automatic confirmation testing for new intakes and additional monthly testing regardless of screening results. Its description of the monthly practice makes the alleged missing decision explicit:

That complaint alleges a recurring testing rule taking the place of an assessment of the individual. Ethos’s own admissions supply the same practical question for a laboratory insider: did the patient’s circumstances and results change the tests, or did the order keep producing the same claims?

Ethos Foundation Pain Index Orders Without Provider Knowledge

From November 12, 2020, through October 6, 2023, Ethos billed Medicare for some Foundation Pain Index tests without the ordering provider deciding the patient needed them. In some cases, the provider did not even know that the testing was being ordered.

Ethos also admitted claims for testing some patients multiple times in the same month. The questions for each patient are straightforward: who selected the test, and who decided it needed to be repeated?

Medicare Suspended Laboratory Payments and Retained Settlement Funds

Medicare suspended payments on July 18, 2023, based on information from the Department of Justice. By August 22, 2024, Medicare held $7,685,493 in suspended payments, according to the agreement.

Ethos agreed that the United States would permanently retain the settlement amount from that money and gave up its rights to it. The agreement directed the treatment of the remaining suspended funds under Medicare payment rules, including reducing or eliminating outstanding overpayments. The settlement turned part of the withheld payments into money Ethos would never receive.

Ethos also signed a five-year corporate integrity agreement with the Office of Inspector General, with yearly independent reviews at its own cost.

The Earlier Ethos Specimen-Validity Settlement

On June 28, 2019, the laboratory entered a $1,345,960 settlement with the Office of Inspector General over allegations that it billed Medicare for specimen-validity testing, a noncovered service.

Specimen-validity testing checks whether a urine sample is consistent with normal human urine and whether it has been substituted, adulterated or diluted. The earlier allegation concerned charging Medicare for that quality-control process. The later agreement addressed the drug-testing panels, the use of presumptive and definitive methods, and Foundation Pain Index claims. Ethos had already settled over what it put on Medicare’s bill.

What a Laboratory Insider Can Connect

In this case, the useful connections run from the provider’s order to the panel performed, the results and the Medicare claim. A billing employee may see the same-sample presumptive and definitive claims. Someone in the referring practice may know whether the provider selected the panel or even knew that the pain test had been ordered. A laboratory employee may know whether the initial result ever changed the testing that followed.

Those accounts can explain how a recurring claim was created. We work with insiders to connect the practice’s decisions with the laboratory’s testing and billing, so the case addresses the conduct behind the volume.

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

You Know How the Tests Were Chosen

If you saw blanket panels, ignored screening results or pain tests billed without the provider’s knowledge, speak to one of our Whistleblower Experts about how the tests were chosen and billed. We build your strongest laboratory fraud whistleblower case with you and bring in whistleblower lawyers who understand Medicare testing claims. We stay beside you throughout the case.