Millennium Laboratories: When Medicare Payment Became the Sales Pitch

In the Millennium Laboratories False Claims Act case, Millennium Health agreed to a $256 million resolution over allegations of unnecessary urine drug and genetic testing and physician referral kickbacks. The government alleged that test profiles became standing orders, free cups brought specimens back to the laboratory, and Millennium billed Medicare, Medicaid and other federal health care programs for testing patients did not need.

Millennium Health, formerly Millennium Laboratories, was a nationwide urine drug-testing company headquartered in San Diego. The Justice Department announced the resolution on October 19, 2015. It included a $227 million urine-testing False Claims Act settlement, a separate $10 million genetic-testing agreement, and $19.2 million for administrative actions by the Centers for Medicare and Medicaid Services over urine-test billing.

Custom Profiles That Became Standing Orders

The government alleged that Millennium promoted custom profiles that caused physicians to order large numbers of urine drug tests without assessing each patient’s needs. The alleged excessive and unnecessary billing ran from January 1, 2008, through May 20, 2015.

The word custom does a lot of work in a medical sales pitch. It suggests that someone has chosen the right tests for the patient. According to the Justice Department, Millennium’s profiles instead operated as standing orders. A selection of tests could carry forward without the individual assessment that was supposed to justify payment.

That puts the order itself at the center of the story. The government alleged that Millennium caused physicians to order the excessive testing, then systematically billed federal healthcare programs for it. The laboratory’s role reached back into the decision to test, before a claim went out for payment.

The Justice Department explained that federal program rules limited payment to services reasonable and medically necessary for an individual patient’s treatment or diagnosis. We see the alleged inversion here: a sales tool was doing the work of a patient assessment. The profile supplied the tests. The patient supplied the specimen.

Free Cups With a Referral Attached

Millennium allegedly gave physicians free point-of-care urine drug test cups on the express condition that they send the specimens back to Millennium for hundreds of dollars of additional testing. The government said that arrangement violated the Stark Law and the Anti-Kickback Statute.

Under that alleged arrangement, the cup connected the physician’s office to the laboratory’s next bill. The office received something of value, while Millennium obtained the specimen and the additional testing business. The return condition explains why the free item mattered: the alleged benefit to the physician came with a referral to the company supplying it.

The Justice Department described the referral laws in practical terms: laboratories generally cannot give physicians things of value in exchange for test referrals. Here, the government’s allegation joined the free cup to the expensive work that followed it. Free at the doctor’s office. Billed at the laboratory.

Genetic Testing Sold on Medicare Payment

The genetic-testing agreement addressed a separate allegation: Millennium routinely performed genetic testing without an individualized assessment of need. The government alleged false claims between January 1, 2012, and May 20, 2015.

The whistleblower complaint about genetic testing brings the pitch into the examining room. It alleged that Millennium’s agents promoted testing for all pain-management patients to identify possible sensitivity to pain medication, while marketing the tests as a route to individualized care. The complaint put the average testing cost at $1,800 per patient.

A physician whistleblower described a meeting with a Millennium agent. According to the complaint, the agent offered this explanation of medical necessity:

We see the absurdity in that alleged pitch: Medicare’s willingness to pay was offered as the reason the patient needed the test. A reimbursement answer to a medical question.

The complaint described a second meeting at which the agent supplied marketing material containing billing codes and instructed the physician to use V58.69, the code for long-term use of prescribed medication, for Medicare coverage. The physician alleged that he ordered testing for four Medicare patients, used the suggested code and confirmed reimbursement for the tests he described as medically unnecessary.

That account connects the sales pitch, a coding instruction, actual orders and payment. It is also a provider’s view of the laboratory business: the person receiving the pitch could describe what the laboratory said, what he ordered and what Medicare paid.

The Whistleblower Cases Behind the Resolution

Whistleblowers brought the qui tam cases that led to the settlements. The Justice Department said the United States joined parts of several whistleblower cases concerning urine drug testing.

The genetic-testing complaint came from Omni Healthcare, a physician group, and a practicing physician who was one of its principals. They described knowledge acquired through their medical work and dealings with Millennium. That is a concrete example of a provider bringing knowledge from outside the defendant’s workforce.

The investigation included the Civil Division’s Commercial Litigation branch and the U.S. Attorney’s Office of the District of Massachusetts.

The Records Behind the Testing Model

The strongest evidence connects the testing decision to the government claim. For a laboratory case like this, we examine how the profile was chosen, what the patient needed, what testing followed, and how the laboratory billed for it. The free-cup arrangement adds another connection: what the physician received in return for directing specimens to the laboratory. We work through those connections with the person who knows how the business operated.

The same standing-order issue appeared in a case against LabCorp described in a 2002 opinion. A competitor alleged unnecessary testing at long-term care facilities, including standing orders set by laboratory employees without physician orders or regard to medical necessity.

Separate Agreements, Separate Whistleblower Awards

The Justice Department announced collective whistleblower awards of $30.35 million from the urine-testing recovery and $1.48 million from the genetic-testing recovery.

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

The resolution also included a five-year corporate integrity agreement with the Department of Health and Human Services’ Office of Inspector General. The agency said most of Millennium’s board would become new independent members and that it would monitor compliance under that leadership.

You Know How the Tests Reached the Bill

If you know how a laboratory’s profiles, referral offers or coding instructions turned into government-paid tests, talk with our whistleblower experts about what you saw. We build the case with you and bring in healthcare fraud whistleblower lawyers who understand laboratory billing and physician referrals. From the first conversation through the pursuit of a recovery, we stay on your side of the table.