PremierTox and SelfRefind: When Insurance Set the Testing Schedule

In the PremierTox SelfRefind fraud settlement, the laboratory, the addiction-treatment chain and two physician owners agreed to pay $15,750,000 over allegations of unnecessary urine testing and inflated claims to Medicare and Kentucky Medicaid. The business relationship explains how the samples reached the lab. The later criminal trial showed something more troubling: specimens waited in freezers while their value to the treating physician passed, then generated claims once the laboratory could bill the insurer.

The Justice Department announced the civil settlement on February 10, 2014. A later criminal trial established how insurance enrollment determined which stored samples PremierTox tested first. For someone inside a laboratory, this case reaches from the clinic’s referral policy to the freezer, the instrument and the billing office.

What Is an Example of Laboratory Fraud?

PremierTox and SelfRefind show how laboratory fraud allegations can begin with a change in where routine patient samples go. SelfRefind operated addiction-treatment clinics in twelve Kentucky cities. PremierTox operated a clinical laboratory in Russell Springs, Kentucky. The same two physicians who owned and operated the clinics became part owners of the laboratory.

SelfRefind required regular urine drug screens, sometimes as often as every two weeks, to check whether patients were using controlled substances or taking their addiction-treatment medication as prescribed. Before the physicians became PremierTox owners, the clinics did not automatically send their urine samples to outside laboratories for additional confirmation testing.

The government alleged that the ownership change brought a new practice: all completed SelfRefind drug screens went automatically to PremierTox for comprehensive additional testing. The government alleged that those tests were frequently unnecessary and often more expensive than suitable alternatives.

The change an employee would recognize was a referral rule. A screen completed at the clinic now generated another round of testing at a business its owners also owned.

Why PremierTox Froze the Samples

The civil settlement announcement alleged that PremierTox accepted a volume of samples it lacked the equipment to test. According to that account, the laboratory froze samples sent from SelfRefind in December 2010 in a storage unit for many months before performing the additional tests.

By then, the government alleged, those tests were medically unnecessary for the patients’ treatment. PremierTox nevertheless submitted claims for reimbursement. The laboratory still had specimens to test. The physician’s need for those results had passed.

The Justice Department’s account of the later criminal trial makes the operational failure concrete. SelfRefind had previously used independent laboratories that returned results within a week. Beginning in October 2010, the physician owners directed the clinics to freeze samples and send them to PremierTox. The company called its storage facility the “Pee Palace.” As many as 10,000 frozen samples accumulated there.

According to that trial account, the owners did not have the testing equipment installed until January 2011 and did not begin confirmation testing until April 2011. Every physician witness testified that confirmation results were needed by the patient’s next visit. The evidence established that the delay made many of the tests useless for treatment.

When Are Toxicology Tests Unnecessary?

Toxicology tests are unnecessary when they do not serve the patient’s treatment needs. In PremierTox’s criminal case, the evidence showed a particularly clear failure: confirmation results arrived long after they had any value in treating the patient.

The clinical distinction matters. A screen indicates whether a drug is present. More precise testing can identify particular drugs and their metabolites. In Ethical Perspectives on Urine Drug Screening for Pain Physicians, published in Pain Physician in 2014, the discussion of confirmatory testing explains how it can distinguish drugs and help establish whether medication was actually ingested. That information has a purpose in a treatment decision.

A 2021 review of urine drug screening in The Journal of Family Practice contrasts rapid, relatively inexpensive screening with more specific confirmation that costs more and can take days.

The industry divides the work between the ordering clinician and the performing laboratory. The clinician holds the medical record explaining the need for testing, while the laboratory performs the service and submits the claim. Medicare’s ordering rule connects the test to a treating clinician who uses the results to manage the patient’s particular medical problem. In the PremierTox trial, physicians described that need in ordinary working terms: the result had to be there for the next visit.

The Drug Class on the Claim Changed the Payment

The civil case also alleged that PremierTox misidentified the class of drug tested and received higher reimbursement. That allegation concerns what the claim said the laboratory had done, alongside the separate question of whether the patient needed the testing at all.

The settlement announcement described both frequently unnecessary additional tests and tests that were more expensive than suitable alternatives. It also described claims for tests more expensive than the ones actually performed. An insider who knows the instrument’s work and the codes submitted can see a part of the case that a referral policy alone will not explain.

When the Clinic’s Owners Also Owned the Lab

The two physicians who owned SelfRefind also became part owners of PremierTox, a separate laboratory in Russell Springs. The government alleged that SelfRefind then began sending all completed drug screens there automatically for additional testing.

In the PremierTox settlement, the government alleged violations of the physician self-referral law, commonly called the Stark Law. The referring physicians had a financial relationship with the laboratory receiving the samples. The change in referrals after they became owners gave that relationship a visible effect on the testing workflow.

What the Civil Settlement Changed

The civil resolution covered claims to Medicare and Kentucky Medicaid under the False Claims Act. Kentucky was a party to the agreement and was to receive approximately $2.74 million as its share of the Medicaid recovery.

PremierTox also agreed to internal compliance reforms and five years of third-party review of its claims to federal healthcare programs under a corporate integrity agreement with the Department of Health and Human Services’ Office of Inspector General.

Anthem Enrollment Set the Testing Schedule

Evidence in the criminal trial established that PremierTox prioritized stored samples according to which insurers it could bill. Medicare and Medicaid samples went first because the laboratory was already enrolled with those programs.

PremierTox did not become enrolled with Anthem until August 2011. Immediately afterward, it took Anthem patients’ samples out of the freezers, tested them and billed the insurer. Some had been collected nine to eleven months earlier, long after the results had any value for treatment, according to the Justice Department’s trial account.

That sequence gives the case its sharpest point. The event that released those samples for testing was permission to bill the insurer. The clinical need described by the physician witnesses had already passed.

The Justice Department’s April 3, 2017 announcement reported that a federal jury had convicted five former PremierTox owners the previous Friday. Each was convicted on seventeen counts of health care fraud involving medically unnecessary tests billed to Anthem Blue Cross/Blue Shield, while the jury acquitted them on other counts alleging related conduct.

The announcement said the jury concluded that each owner acted with specific intent to defraud Anthem by billing for those delayed tests.

What a Laboratory Insider Can Connect

The records that matter in a case like this connect the patient’s treatment to the sample’s path and the eventual claim. The clinic’s screen and confirmation order show what information the physician wanted. The specimen’s collection and testing dates show when the laboratory produced it. The result and the patient’s next visit show whether it reached the clinician in time to serve that purpose.

The billing side completes the picture: the drug class actually tested, the class claimed, the insurer and the laboratory’s enrollment date. At PremierTox, the criminal trial connected the testing order to payer eligibility. The civil allegations connected the referral change to ownership and the higher reimbursement to the description on the claim.

A laboratory employee may know why one batch stayed frozen while another was tested. A clinic employee may know when an individual confirmation decision became an automatic referral. A biller may know why claims started going to an insurer. We work with insiders to connect those decisions into a laboratory fraud case.

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

Automatic Testing Appears in Other Cases

In Precision Toxicology’s settlement announcement, the government alleged that custom profiles acted as standing orders for large numbers of urine drug tests without an individualized assessment of each patient’s needs.

You Know Why the Samples Waited

If you know who chose the testing schedule, changed the referral policy or tied a batch of samples to an insurer’s enrollment date, speak with our whistleblower experts. We build the case with you and bring in laboratory fraud whistleblower lawyers who understand how clinical orders become insurance claims. We stay alongside you as your knowledge of the testing business becomes a case for recovery.