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Drug-Test Labs Battle in Court

Leon County Judge John Cooper on June 30, 2022, in a screen grab from The Florida Channel.
The Florida Channel
Leon County Judge John Cooper on June 30, 2022, in a screen grab from The Florida Channel.

A federal jury in Tampa began deliberations Friday afternoon on a lawsuit by Ameritox Ltd. against Millennium Laboratories, two significant players in the drug-testing business.

The eight jurors, whose verdict form is a whopping 96 pages, must decide whether Millennium's sales gimmick of giving doctors free urine specimen test cups violates laws on health fraud.

They must weigh accusations that Millennium broke not only federal kickback laws but also rules involving unfair and deceptive business practices in Florida and five other states.

Ameritox says it should be awarded almost $19 million in actual damages for lost business, including $9.3 million in Florida. It also wants punitive damages.

"Ameritox cannot compete with illegal free supplies and equipment," said attorney Patrick Collins. "Ameritox wants a level playing field."

But Millennium's attorney James Carroll said the new company has grabbed a lot of Ameritox business because it offers better service to its doctor-customers and a much shorter turnaround time.

The urine cups that Millennium provides to doctors have test strips that make it possible to do a quick drug-test check while a patient is in the office. Doctors have to promise not to bill for the tests, so there's no fraud going on, he said.

"The cup agreement helps patients and helps doctors help patients" by revealing abuse of prescription or other drugs in time for the doctor to intervene, Carroll said. "The only one it hurts is Ameritox."

Unless jurors reach a unanimous verdict quickly -- a possibility seen as remote -- U.S. District Judge Susan Bucklew said she will send them home for the weekend, to resume deliberations Monday.

Ameritox, based in Baltimore, accuses Millenniumof offering doctors an illegal incentive to get their business -- free plastic cups for a quick do-it-yourself urine screen that can test for multiple drugs while the patient is still in the office.  The same cups can be used to send the urine on to Millenium to confirm the result through a more elaborate set of tests, for which the company can bill public or private insurers.

Last month, Judge Bucklew granted Ameritox a partial victory, saying the actions that Millennium admits to are clearly in violation of the federal Stark Law and Anti-Kickback Statute for some of its doctor-customers, the ones who bill insurers for doing chemical analysis on the urine. But it’s not clear whether the law applies to doctors who agreed not to bill; on those, she’ll let the jury decide.  

This is not a criminal case, but a civil lawsuit. So Millennium, a fast-growing upstart from San Diego,  will likely face a money penalty; the amount of damages depends on the jury’s verdict.

Even though the specimen cups cost only $5 apiece, the case is no tempest in a pee pot, says Jay Wolfson, a lawyer who won a multimillion-dollar whistleblower case last year involving laboratory kickbacks, as Health News Florida reported.

“This isn’t about a $5 cup,” said Wolfson, University of South Florida professor of public health and medicine. “It’s about a multibillion-dollar portion of the (health-care) industry.”

But as he notes, none of the parties come to the table with clean hands. Certainly not Ameritox:

Four years ago, in a federal kickback case in Tampa, Ameritox agreed to pay more than $16 million to settle charges.  The Baltimore-based company signed a five-year “corporate integrity agreement” with the Inspector General of the U.S. Department of Health and Human Services.

Leon County Judge John Cooper on June 30, 2022, in a screen grab from The Florida Channel.
Credit Jay Wolfson
The Florida Channel
Jay Wolfson, a University of South Florida professor of public health and medicine

“It’s kind of like being on probation,” Wolfson said.

And on April 30, PreetBharara, the U.S. attorney for the Southern District of New York State, issued a “civil investigative demand” for information on Ameritox’s own incentives for doctors, as well as a host of  billing records, lease arrangements and more.

Questions about the lease arrangements may be related to a practice that Health News Floridareported on in 2011. Drug-testing labs were paying “rent” to Florida pain-management doctors for part of their offices so they could station a collector for urine samples. The Agency for Health Care Administration told Ameritox and others that the leases were not permitted.

While the New York prosecutor’s broad demand for records doesn’t necessarily mean Ameritox has done anything wrong, it’s ominous because of the 2010 settlement.  At stake are Ameritox’s federal billings, estimated at almost $100  million a year.

Also, in mid-April, U.S. District Judge Sharon Gleason issued an order slamming Ameritox in a wrongful termination case against Millennium filed in Arizona by a former employee, Kelly Nelson.

Gleason says that all parties to the Arizona case, including Ameritox - since it was involved in the related case in Tampa, agreed to a “protective order” that would keep certain documents from becoming part of the public record.

But the judge says that Nelson gave Ameritox some depositions from Millennium employees, and Ameritox filed them as exhibits in the Tampa suit. Gleason said that since Ameritox is paying Nelson’s legal bills, the two were working in concert.

In Alaska at the time of her order, Gleason said she will return to Phoenix  in July to hear Nelson v. Millennium.  One of her tasks, she said, will be a hearing on whether Nelson and Ameritox “should be found in contempt.”

While the intertwined cases can be dauntingly complex, Wolfson said the concept is simple: If a laboratory gives a physician something free that the doctor can use to make money, that’s wrong.

“It’s not wrong if you’re in the supermarket business, but it’s wrong in health care,” he said. That’s because the gift-giver creates a financial incentive for a physician to perform a service that may not be needed.  In some cases, he said, the extra services aren’t just unnecessary but downright harmful to patients.

Besides, “it costs us all money,” Wolfson said. “That’s what the fraud laws in Medicare are all about.”

Carol Gentry, founder and special correspondent of Health News Florida, has four decades of experience covering health finance and policy, with an emphasis on consumer education and protection.