Lags Medical: The Same Maximum Drug Panel for Every Patient

In the Lags Medical settlement, the practice and its owner agreed to pay $11,388,887 over allegations of billing Medicare, Medi-Cal and Oregon Medicaid for unnecessary urine drug tests, skin biopsies and spinal cord stimulation surgeries. The practice acknowledged ordering the maximum drug panels for every patient on the same schedule. When a consultant called the testing wasteful, the owner told an executive not to contact her because she might report them.

The Justice Department announced the civil settlement on July 11, 2023. Lags Medical is the name used by Lags Spine & Sportscare Medical Centers Inc. Its owner also served as its medical director. The case reached into decisions about laboratory testing, invasive procedures and access to pain medication.

Maximum Urine Drug Panels on a Fixed Schedule

Lags Medical and its owner acknowledged making identical urine drug test orders for all patients every four months, with the maximum number of drug panels under G0483. The government’s allegations of medically unnecessary testing covered 2017 through 2021.

That choice carries a payment consequence. Medicare’s fee-schedule files group definitive testing into tiers by the number of drug classes. G0483 is the highest of those tiers, covering 22 or more drug classes. Putting every patient into that category means selecting the broadest tier before accounting for differences among patients.

The Justice Department’s account says Medicare does not cover blanket orders made without regard to each patient’s medical need.

The release also records what management said about the plan. The chief executive told the owner that testing all their patients “[s]hould be a big money maker” and called it “Operation GO483!”

A new consultant challenged the maximum-panel orders as “medically unnecessary but also wasteful.” According to the release, the owner then directed an executive not to contact her:

The exchange connects the testing protocol to management’s knowledge of the clinical objection.

Skin Biopsies Ordered to Meet a Quota

The skin-biopsy allegations covered 2016 through 2021 and concerned testing for small fiber neuropathy. Lags Medical and its owner acknowledged that he created an “Artificial Intelligence Team” of non-provider staff required to order at least 150 biopsies a week, without the consent of the patients’ treating providers.

According to the settlement announcement’s biopsy account, each order described identical symptoms. Those descriptions were generally inconsistent with the patients’ actual symptoms. The paperwork supplied the same medical reason over and over while the staff worked toward a weekly volume target.

The pressure reached patients directly. Lags Medical and its owner acknowledged that, when a patient refused a biopsy, the practice told the patient it would reduce their opioid medication and instructed the treating provider to begin tapering immediately.

That is a revealing use of the treatment relationship. Patients came for pain care, and access to their medication became pressure to accept another procedure. The treating provider’s consent was bypassed when the order was made, then that provider was told to change the patient’s medication when the biopsy was refused.

Spine Surgery Supported by Claimed Evaluations

The government alleged that Lags Medical and its owner performed unnecessary spinal cord stimulation surgeries from 2018 through 2021. These implant procedures are invasive and used as a last resort for chronic pain.

The government alleged that the owner paid a psychiatrist to tell Medicare and Medicaid insurers that each patient had received the necessary psychological evaluation and had no preexisting psychological or active substance abuse disorders that would adversely affect the response to surgery.

The government alleged that the owner and Lags Medical knew the psychiatrist had performed no in-person psychological evaluations of the patients. It also alleged that they ignored indications of psychological or substance use disorders before surgery.

When Are Toxicology Tests Unnecessary?

In the Lags Medical case, the government challenged identical maximum-panel orders applied across the practice without regard to individual need.

The clinical literature explains why patient selection matters. The Journal of Family Practice’s 2021 guide, Urine Drug Screening: A Guide to Monitoring Tx With Controlled Substances, describes testing frequency built around ongoing assessment: the patient’s history, earlier toxicology results, behavior and prescription monitoring. Its recommendations vary with risk and include screening high-risk patients at least every four months. The risk assessment supplies the reason for the schedule.

Test selection is a separate decision. The same guide ties the testing method to the clinical question and describes how financial interests can encourage large, expensive panels and unnecessary confirmation testing. Lags Medical’s acknowledged protocol joined a fixed schedule to the maximum panel for everyone.

The 2014 Pain Physician paper Ethical Perspectives on Urine Drug Screening for Pain Physicians describes testing as a way to monitor prescribed medication use and detect illicit drugs. It emphasizes interpreting results in clinical context, rather than allowing a test alone to dictate treatment. That puts the patient back into a process that a standing maximum-panel order can reduce to a recurring bill.

The Settlement and the Insider Who Brought the Case

The Lags Medical settlement amount was based on the practice’s and owner’s ability to pay. It included proceeds from the owner’s sale of a remotely operated underwater vehicle. The owner also agreed to a voluntary five-year exclusion from federal health care programs as part of the civil settlement.

The case began with a whistleblower who had served as Lags Medical’s operations director and marketing director. The Justice Department announced that the former director would receive approximately $2.1 million. The resolution covered the drug testing, biopsies and spine surgeries together.

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

You Know Who Set the Testing Protocol

If your clinic’s orders follow a revenue target, or you saw a clinical objection pushed aside, talk with our whistleblower experts about what happened inside the practice. We work with you to build your strongest case around the orders, patient records and management decisions, and bring in healthcare fraud whistleblower lawyers who understand laboratory billing and pain-management practices. We stay with you from the first call through the case.