Surgery Partners: The Parent Behind the Automatic Drug Tests

In the Surgery Partners Logan Laboratories lawsuit, Logan Laboratories, Tampa Pain Relief Centers and two former executives agreed to pay $41 million over allegations of automatic, medically unnecessary urine drug testing. Surgery Partners owned both businesses, and the whistleblower complaints put its policies and electronic ordering system at the center of the alleged scheme. Someone who saw the testing instructions inside the clinic could know why the laboratory kept receiving the same orders.

The Department of Justice announced the settlement on April 15, 2020. Whistleblowers brought separate qui tam cases in Pennsylvania and Florida, and the federal government joined both. The Florida whistleblowers were a pain management specialist and a physician recruiter. Surgery Partners was a named defendant alongside Logan Laboratories in the Pennsylvania complaint and also appeared in the Florida case.

What Surgery Partners Controlled

Surgery Partners was the parent of a pain practice that saw patients and a laboratory that tested their specimens. The settlement agreement filed with the Securities and Exchange Commission identifies Tampa Pain and Logan Labs as wholly owned indirect subsidiaries. Both were based in Tampa, Florida, with the pain practice operating offices across central and south Florida.

The executive roles crossed those businesses. The former chief executive of Surgery Partners also served as chief executive of Logan Labs. Another former executive was the parent’s group president for ancillary services, with oversight of Logan Labs, and a vice president of Tampa Pain. The same management structure reached the parent, the laboratory and the referring practice.

The complaints alleged that the parent exercised that reach through instructions physicians encountered in their daily work. Those included an electronic system that selected tests, a policy tying prescriptions to confirmation results, and restrictions on sending specimens elsewhere. A laboratory’s claim can be the last visible step in a policy set elsewhere in the business.

The Parent’s Policies Inside the Exam Room

The government alleged that Tampa Pain billed presumptive urine tests and Logan Labs billed definitive tests under a policy that automatically ordered both for every patient at every visit, without an individual medical decision. The Logan Laboratories and Tampa Pain Relief page covers the ordering and billing workflow in detail.

A Prescription Had to Wait for the Laboratory

The Florida whistleblower complaint alleged that a January 2017 Surgery Partners policy required confirmation testing for every new patient and every medication change, including a dose adjustment. Under the alleged policy, pain specialists could not issue a new prescription until the confirmation results arrived.

That instruction gave the laboratory a place in the prescribing decision. The patient came for treatment, but the physician allegedly had to wait for the company’s required test before issuing the prescription.

Do Doctors Get Kickbacks for Ordering Tests?

Here, the Pennsylvania whistleblowers alleged that doctors received kickbacks for referrals to Logan Labs, including anesthesia discounts and preferred surgery times at Surgery Partners’ centers. The Florida whistleblowers also alleged that the parent’s employment agreements gave physicians incentive compensation after a year based partly on profits from ancillary services, including Logan Labs.

The complaints put the parent’s compensation terms and surgery-center arrangements alongside the testing instructions. Each allegedly helped direct work to the laboratory.

What Evidence Is Needed to Prove Fraud?

For this alleged scheme, the evidence connects company instructions with the tests ordered and the claims submitted. The Surgery Partners complaints make that connection tangible: a setting inside NextGen, a written prescription policy and an employment agreement tying compensation to ancillary profits.

A person who worked with those systems may know who approved the default, what choices physicians could make and what happened when a physician wanted to use another laboratory. A person on the billing side may know how the same policy appeared as repeated presumptive or definitive testing claims. Those perspectives meet at the point where a company instruction becomes a billed service.

Our whistleblower experts work with you to turn what you saw into your strongest laboratory fraud whistleblower case, connecting the company’s policy to the ordering and billing it produced.

What the Settlement Required

The agreement covers claims from 2012 through 2017. It names Medicare, Medicaid, TRICARE and other federal health care programs among the payers.

The settlement assigned payments to Logan Labs and Tampa Pain collectively and required each of the two former executives to pay $500,000. The government agreed to drop its demands for money from Surgery Partners over this testing once the subsidiaries paid their full federal settlement amount.

The subsidiaries entered separate agreements with the Department of Health and Human Services Office of Inspector General: an Integrity Agreement for Logan Labs and a Corporate Integrity Agreement for Tampa Pain.

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

When Are Toxicology Tests Unnecessary?

In this case, the government alleged that tests were unnecessary when the companies ordered both types automatically, for every patient at every visit, without an individual medical decision. The clinical literature explains why patient-specific judgment belongs in that decision. The Journal of Family Practice guide puts the problem with routine visits plainly:

The guide also identifies large, expensive panels, excessive testing frequency and unnecessary confirmation of every positive screen as practices associated with insurance fraud.

The same ordering problem appeared in the government’s complaint in a whistleblower case against Physicians Choice Laboratory Services. The government alleged that a provider acknowledgment form put the physician’s signature on file and established a panel the laboratory would run on every specimen unless the physician selected different tests. The alleged default lived on a form there and in software here. Both accounts give an insider a concrete place to recognize how a broad testing policy reaches an individual patient’s order.

You Saw Who Set the Testing Policy

If you saw a parent company’s software, prescription rules or compensation terms drive unnecessary laboratory testing, talk with our whistleblower experts about what happened inside the business. We build the case with you, bring in laboratory fraud whistleblower lawyers who understand ordering systems and healthcare billing, and stay beside you through the pursuit of a recovery.