Health Line Clinical Laboratories: The Tests Doctors Did Not Know They Ordered

In the Health Line Clinical Laboratories fraud settlement, the company and two individuals agreed to pay $10 million to the United States and California over allegations that the laboratory added expensive tests to commonly ordered panels. Physicians could order the extra tests without realizing it. For someone who worked with the test menu, requisitions or billing, that is the important distinction: the physician chose a panel, but the laboratory allegedly chose what else went into it.

HHS-OIG reported the civil resolution in fiscal 2004. The alleged conduct ran from January 1996 through September 2003. The alleged additions put taxpayers on the hook for tests physicians did not know they were ordering.

What Health Line Allegedly Added

The question begins with the menu the laboratory put in front of the doctor. What did selecting that panel actually order, and what did the physician understand it to include?

A panel name can compress several testing decisions into a single selection. In the Health Line allegations, that convenience gave the laboratory a way to introduce expensive tests into ordinary ordering. The extra work could appear to originate with the physician because it arrived under the panel the physician selected.

For an insider, the useful knowledge may be very specific: which tests appeared under a familiar panel name, who decided to include them, and what ordering practices were told. Those decisions connect the laboratory’s test offering to the claims that followed.

Why the Panel Menu Mattered

The ordering clinician, the laboratory performing the work and the program paying for it occupy different positions. As the industry’s documentation rules reflect, the physician holds the patient’s medical justification, while the billing laboratory holds the ordering information it received and the claim built from it. An order form sits between those records.

The importance of showing physicians what was in a profile was already explicit during the period covered by the Health Line allegations. In June 1997, Laboratory Medicine published Model Plan Helps Laboratories Fight Fraud, describing the HHS inspector general’s laboratory compliance recommendations.

The article described annual notices explaining the individual tests in laboratory profiles, the codes used to bill Medicare and how the laboratory would bill each profile. For customized profiles, it stated:

The point was an informed ordering decision. The notice connected the clinical menu with the bill the laboratory would send. Health Line’s alleged mechanism exploited that same separation: physicians could select a panel without understanding the expensive tests the laboratory had added.

The Pattern Behind the Panel

In its 1997 announcement concerning Meris Laboratories, the Justice Department alleged that Meris routinely added medically unnecessary HDL cholesterol and serum iron tests to automated panels, then billed health care programs separately even though physicians had not specifically ordered those tests.

The court’s account of the Damon criminal case describes how Damon added ferritin to its LabScan panel, presented it as free to doctors and patients paying directly, and charged Medicare extra.

The General Accounting Office’s 1998 report on hospital laboratory billing explained that automated profiles cost less to run and generally received lower reimbursement than the same tests billed separately.

What the Civil Resolution Required

Health Line’s resolution combined a civil payment with a corporate integrity agreement lasting five years.

Why does review matter in a panel case? The decision that generates a claim may sit in an order form used repeatedly. A review that reaches the originating documents can examine the connection between the selected tests and the resulting bill.

The same perspective helps an insider explain a panel concern. A billing entry shows what the laboratory charged. The order form and test results help show how the laboratory arrived there. Communications with the ordering practice can show whether the physician knew what had been included.

What Evidence Is Needed to Prove Fraud?

For an added-panel case, useful evidence connects what the clinician selected with the panel’s components, the testing performed and the claim submitted. We also look at who made the decision to add the tests and what the laboratory told the ordering practice.

The evidence can sit in different departments. A sales representative may know how the profile was described. A laboratory employee may understand the tests included in it. A biller may see the separate charges. Someone in the physician’s office may know what the doctor intended to order.

Those views become more useful together. In Health Line, the alleged gap was between the laboratory’s panel contents and the physician’s understanding of the order. Our work with an insider is to connect that knowledge to particular testing and payment decisions.

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

You Know What Changed in the Panel

If you saw a lab add tests that physicians did not understand they were ordering, talk with our whistleblower experts about the decisions behind those bills. We build your strongest laboratory fraud whistleblower case with you and bring in laboratory fraud whistleblower lawyers who understand how requisitions, test selection and payment fit together. We stay on your side throughout the case.