Noah Associates: Sham Agreements for Treatment-Clinic Drug-Test Referrals

The Noah Associates laboratory kickbacks case involved more than $400,000 paid for Medicare and Medicaid urine-test referrals from a Milwaukee substance use treatment clinic, according to court records described in the Justice Department’s criminal-case announcement. The lab billed for tests no physician had ordered. When a physician discovered that someone was using his credentials and told an owner to stop, the billing continued for months.

Noah Associates was a Milwaukee-area clinical laboratory owned by two people. The government’s account describes a three-year arrangement beginning in 2017: the owners paid the treatment-clinic owner for patient referrals, Noah performed the urine drug tests, and the public programs paid the laboratory. Both owners pleaded guilty to paying health care kickbacks in violation of the Anti-Kickback Statute.

The owners hid the payments behind sham agreements, according to court records described in the Justice Department’s other criminal-case announcement. For someone inside a treatment clinic or laboratory, the case connects the referral contract to the order that reached the lab and the claim that went out.

A Clinic Referral and a Physician Order Do Different Jobs

A treatment clinic can supply a stream of patients without supplying the medical decision that supports a laboratory claim. Medicare’s diagnostic testing rule ties the order to a treating physician or qualified practitioner who uses the result to manage the patient’s specific medical problem.

The government said the tests were neither ordered by a physician nor medically necessary for treating the patients. The referral arrangement supplied business to the laboratory while the clinical basis for billing was absent.

The order, the clinical reason and the claim have to describe the same work.

When Are Toxicology Tests Unnecessary?

Toxicology tests become unnecessary when their scope or frequency outruns the patient’s clinical need. A treatment program’s testing routine can keep producing specimens even when a patient’s condition calls for fewer laboratory tests.

The 2021 Journal of Family Practice review Urine Drug Screening: A Guide to Monitoring Tx With Controlled Substances explains that testing at every addiction-treatment visit is often unnecessary for stable patients. It describes adjusting visits and testing as a patient’s addiction behavior changes, and identifies large panels, excessive frequency and unnecessary confirmatory testing as practices that have been driven by a financial interest in testing.

The review also describes a distinction familiar to clinic staff:

Collecting a specimen and deciding to run a laboratory test are separate events. The patient’s care should explain the decision to test. In Noah’s case, the government’s account instead describes payments that bought referrals for tests patients did not need.

Sham Agreements and the Money Behind the Tests

The Justice Department’s criminal-case announcements describe a paid referral arrangement behind the sham agreements. The clinic owner supplied access to Medicare and Medicaid patients. The laboratory performed the testing, billed the programs and paid the referral source.

Medicare and Medicaid paid Noah Associates more than $2.2 million for the unnecessary tests. One owner personally received more than $800,000 from Noah during the scheme. The other personally received hundreds of thousands of dollars.

The agreements matter because they describe what the parties said the money was for. The referral and payment records show what the arrangement actually bought. When we examine a laboratory referral relationship, we compare the promised service with the work performed, the source of the specimens and the payments flowing back to that source.

Here, the government’s account connects the money directly to obtaining the tests. Taxpayers paid the laboratory, and the owners paid the person who supplied the patient stream. Patients in addiction treatment were tested because someone was paid to send them.

The Billing Continued After the Physician Objected

The Justice Department’s January criminal-case announcement describes what happened when a physician learned that his credentials were being used without authorization to order tests. He told one of Noah’s owners to stop.

The owner continued having Noah accept and bill the government for tests falsely ordered under those credentials for months. The lab had been told that the doctor behind the orders had not authorized them. It kept using the orders to obtain payment.

The doctor said stop. The lab kept billing.

The Justice Department also reported that Noah Associates had shut down.

What Evidence Is Needed to Prove Fraud?

For a laboratory kickback arrangement, the useful evidence connects the referral payment to the order, the test and the government claim. Noah’s case adds a particularly concrete connection: the physician’s objection and the billing that followed it.

We examine the agreement and the work it describes alongside the payments to the referral source. We then connect the requisitions and test results with the clinical justification, claims and program payments. Communications about disputed orders can show who inside the laboratory understood the problem and what happened afterward.

A clinic employee may know how patients entered the testing stream. Someone in the laboratory may know which orders it accepted. A billing employee may see the claims and payment records. Those views can fit together even when no single person handled the entire arrangement.

Claims for tests obtained through kickbacks can also support a civil False Claims Act case. A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers.

You Know Where the Orders Came From

If you saw a referral contract buying urine tests or a physician’s credentials used after an objection, speak to one of our Whistleblower Experts about the orders the lab billed. We build the case with you, connect you with laboratory fraud whistleblower lawyers who understand referral payments and unsupported orders, and stay beside you through the pursuit of a recovery.