Metric and Spectrum Diagnostic Labs: The Invoices That Matched the Kickback Formula

Metric Lab Services, Metric Management Services and Spectrum Diagnostic Labs, with two of their owners, agreed to pay $5.7 million to resolve allegations that they bought genetic-testing samples with kickbacks and caused false Medicare claims. The government’s account follows the money into the laboratory’s books: marketers received a share of testing revenue, then submitted hourly invoices that matched the agreed payment. Someone inside the business could see what the contract called the work and what actually set the price.

The Justice Department’s July 22, 2022 announcement named Metric Lab Services LLC, Metric Management Services LLC and Spectrum Diagnostic Labs LLC, together with two of their owners and operators. Metric and Spectrum were clinical laboratories in Mississippi and Texas. Before the civil settlement, the two owners had each pleaded guilty to conspiracy to defraud the United States in connection with the scheme.

How the Alleged Genetic-Testing Scheme Worked

The government alleged that marketers solicited genetic-testing samples from Medicare beneficiaries and arranged for a physician to fraudulently attest that the testing was medically necessary. Metric and Spectrum then processed the tests, received Medicare reimbursement and paid part of that reimbursement to the marketers.

For a laboratory employee, that sequence puts the referral arrangement inside the billing story. A sample’s arrival, its accompanying order and the later payment to a marketer belong to the same transaction.

The patient-needs problem sits at the beginning. According to the government’s allegations, the physician’s medical-necessity attestation came through the marketers who were being paid for the samples. Patient need was supposed to drive the test. The alleged financial arrangement rewarded bringing the test to the laboratory.

Hourly Invoices With a Price Already Agreed

The government alleged that sham hourly marketing agreements disguised payments for samples. Metric and Spectrum contracted for consulting, marketing and other work at hourly rates, while actually paying marketers a percentage of revenue, including Medicare reimbursement.

In the government’s account, the contract described time. The payment rewarded revenue from samples.

An accounts-payable employee might see the hourly invoice. A sales or marketing employee might know the percentage agreed with the recruiter. Someone working with reimbursement could see the Medicare receipts that supplied the money. Read together, those records can reveal why an invoice has the total it does.

The alleged disguise also explains why the case reaches beyond a misleading description in the accounts. The laboratories were accused of using Medicare revenue to buy the samples that generated more testing business. Honest laboratories had to compete for that business against an arrangement in which part of the government’s payment went back to the source of the referral. Taxpayers funded the tests and, through the alleged kickbacks, the machinery that brought them in.

The Medical Reason Lives With the Treating Clinician

The alleged fraudulent physician attestation supplied the medical justification for the tests Metric and Spectrum billed.

Under Medicare’s diagnostic-testing rules, the ordering clinician maintains the medical-necessity documentation in the patient’s record. The laboratory submitting the claim maintains the information received from that clinician and documentation that its claim accurately reflects it. The clinical reason and the bill may therefore sit in different businesses.

This problem was familiar long before the genetic-testing arrangements described here. In June 1997, Laboratory Medicine published Model Plan Helps Laboratories Fight Fraud, discussing federal recommendations for laboratory requisitions. It described uniform forms with space for the physician to document the medical necessity of each ordered test through a diagnosis code.

That paperwork carries a medical decision into a laboratory that did not make it. The government alleged that the marketers arranged a fraudulent attestation at precisely that point. The order then accompanied the sample into testing and Medicare billing.

For an insider, knowing who obtained the order can be as important as knowing who sent the sample. The allegation joins those roles: the marketers supplied the business and arranged its medical justification. That is why a review of the payment arrangement has to reach back to the ordering relationship.

Sun Health Sold Samples and Orders to the Laboratories

In the criminal case described in the November 2021 guilty-plea announcement, Sun Health Advocates LLC’s owner admitted participating in a conspiracy to receive kickbacks for referrals of samples and genetic tests. Sun Health supplied patient DNA samples and physicians’ orders to Metric and Spectrum.

The plea account describes Sun Health’s agreements to deliver those samples and orders in return for kickbacks based on the laboratories’ Medicare revenue. Metric and Spectrum paid Sun Health approximately $1.16 million in kickbacks. Sun Health issued sham hourly invoices after the parties had already agreed on the kickback amount.

Ark Laboratory Network’s Sample and Order Recruitment

The Ark Laboratory Network case addresses how recruiters allegedly obtained patient samples and genetic-test orders, as described in the Justice Department’s September 2019 indictment announcement.

What an Insider Can Connect

The useful evidence in this kind of health care kickback case connects the source of the samples to the medical orders, Medicare payments and compensation returned to the marketer. The invoice matters because it records a price that can be compared with the underlying referral agreement.

If you worked in marketing or finance, you may know how that price was set, who approved it and what the hourly description was intended to convey. If you handled incoming samples or billing, you may know which recruiter supplied the orders and which tests generated the reimbursement. Those are different views of the same business arrangement.

We work with insiders to connect those views. A contract can show the services the parties claimed to buy. The compensation agreement and payment records can show the business they actually rewarded. The medical order explains how a recruited sample became a claim for a medically necessary test. Together, those connections put the people making the decisions back into a transaction that an invoice can make look routine.

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

You Know What Set the Invoice Amount

If you know why an hourly marketing invoice matched a share of laboratory revenue, speak to one of our Whistleblower Experts about the arrangement. We build the case with you around the referrals, the orders and the money, and bring in laboratory fraud whistleblower lawyers who understand genetic-testing kickbacks. We stay beside you through the process, turning your knowledge of the business into your strongest laboratory kickback whistleblower case.