University of Miami: Unnecessary Laboratory Tests and Off-Campus Billing
The University of Miami agreed to pay $22 million in a laboratory fraud settlement resolving allegations of unnecessary testing, improper off-campus hospital billing and inflated pre-transplant laboratory claims. The case turned on three things a laboratory or billing insider would recognize: what the electronic ordering system did when a patient checked in, what patients were told about higher hospital charges, and how one institution bought tests from another.
The Department of Justice announced the settlement on May 10, 2021. It covered three alleged practices under the False Claims Act. The University allegedly charged higher hospital rates without the required patient notice, billed federal health care programs for unnecessary tests, and caused Jackson Memorial Hospital to submit inflated claims for testing purchased from the University.
The Pre-Set Protocol for Kidney Transplant Patients
The University’s electronic ordering system triggered a pre-set protocol of laboratory tests each time a patient checked into the Miami Transplant Institute, according to the government’s account. The University and Jackson Memorial Hospital operated the transplant program together, and the University’s laboratory ran the tests.
The government alleged that several tests in the protocol for all kidney transplant patients were medically unnecessary. It said financial considerations, rather than patient care, dictated those tests. The University allegedly billed federal health care programs for that unnecessary work. The alleged financial decision was already built into the testing routine.
For someone who worked with that system, the important knowledge is how the protocol selected tests and how those selections related to each patient’s care.
Off-Campus Hospital Billing and the Missing Notice
The government alleged that the University converted physician offices into off-campus hospital facilities and sought payment at higher rates without giving Medicare patients the required notice about the financial consequences. The higher hospital rates cost Medicare more, and patients paid more too.
The Justice Department explained that Medicare permits medical systems to convert physician offices into hospital facilities when they meet the requirements. The required notice tells patients what receiving services there means financially compared with receiving them at a physician’s office.
According to the government, a Medicare Administrative Contractor told the University its notices fell short. The University allegedly kept seeking the higher payments anyway.
Pre-Transplant Tests Bought at Inflated Rates
The government’s third allegation was that the University caused Jackson Memorial Hospital to submit inflated reimbursement claims for pre-transplant laboratory tests. It alleged that the University controlled the hospital’s decision to buy those tests from the University at inflated rates.
As the Justice Department explained, Medicare’s related-party reimbursement rules limit payment for those tests to the performing entity’s actual costs. In this allegation, the University supplied the laboratory work, Jackson Memorial Hospital bought it, and the hospital submitted the reimbursement claims. The price charged between them was part of the alleged problem.
The government also described what the purchasing decision was allegedly tied to: the University’s surgeons and Department of Surgery continuing to perform surgeries at Jackson Memorial Hospital. The alleged exchange connected the laboratory purchases to the hospital’s surgery business.
Jackson Memorial Hospital reached its own, separate $1.1 million settlement over this conduct.
A laboratory finance or hospital purchasing insider may know that relationship directly.
What Evidence Is Needed to Prove Fraud?
For these allegations, the evidence connects the test protocol and patient’s clinical need, the hospital notices and contractor warning, or the purchase price and reimbursement claim. Medicare’s documentation rules place the patient’s medical justification with the ordering practitioner. The billing entity holds the information it received and the support for what it put on the claim.
In the transplant protocol allegation, that makes the connection between the electronic test selection and the patient’s clinical record especially important. Our work with an insider starts with the particular decision they understand and connects it to the claim for payment.
The Settlement and the Controls Behind the Orders
The University also agreed to enter a corporate integrity agreement with the Department of Health and Human Services alongside the civil settlement.
The need to examine recurring orders was familiar well before this case. In June 1997, Laboratory Medicine published Model Plan Helps Laboratories Fight Fraud, describing the federal inspector general’s model compliance plan. The article described monitoring existing standing orders for continued validity and analyzing test-use data. It also described requisition forms with space for a diagnosis code supporting each test’s medical necessity, and notices explaining the individual tests inside a laboratory profile and how the laboratory would bill them.
Those controls look beyond whether a laboratory completed the work. They examine the orders that keep sending work to it.
Three qui tam cases filed by whistleblowers brought the allegations resolved in the University settlement. A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers.
You Know How the Orders Became Claims
If you saw a transplant testing protocol serve revenue, patient notices ignored or laboratory purchases tied to a hospital’s surgery business, speak with our Whistleblower Experts about the billing decisions you saw. We build your strongest laboratory whistleblower case with you and bring in healthcare fraud whistleblower lawyers who understand laboratory orders, hospital billing and institutional payment arrangements. We stay beside you as your knowledge becomes the foundation of the case.
