COVID-19 Testing Fraud Spurs the Largest Avalanche of Healthcare Fraud Investigations in U.S. History
When the COVID-19 pandemic began, it was only a matter of time until people seeking to profit from the pandemic started getting into trouble. First it was price gouging for masks, personal protective equipment (PPE), toilet paper, and other necessities. Then it was fraud under the Paycheck Protection Program (PPP) and Economic Injury Disaster Loan (EIDL) program. Now, fraudulent COVID-19 testing practices have spurred the largest avalanche of healthcare fraud investigations in U.S. history.
It has been about two years since the U.S. Centers for Disease Control and Prevention (CDC) developed the first COVID-19 test. Since then, nearly a billion tests have been administered in the United States—and this number will quickly grow into the billions as testing continues to become more prevalent, and as mandates remain in place at schools, at airports and other transportation hubs, and at businesses of all kinds.
Today, even though the Biden Administration has purchased one billion at-home COVID-19 tests to give Americans for free, COVID-19 testing remains big business. As demand continues to increase, labs and other businesses are promoting their testing services at a fever pitch. While many of these testing services are legitimate, it is also clear that COVID-19 testing fraud has become widespread.
Federal Authorities are Aggressively Targeting COVID-19 Testing Fraud Nationwide
From established laboratories to pop-up testing chains, federal authorities are targeting all types of entities that are offering COVID-19 testing. Specific allegations run the gamut from billing for phantom patients to not providing test results—and in some cases not even performing tests at all.
State authorities are getting involved as well. As just one recent example, in January, NBC News reported that a national pop-up testing chain called the Center for COVID Control is being accused of improperly billing the federal government $120 million for tests provided to uninsured patients. The investigation involves the CDC and the Federal Bureau of Investigation (FBI), as well as the attorneys general of Colorado, Illinois, Massachusetts, Minnesota, and Oregon. According to NBC News, specific allegations against the company include billing for tests not performed, failing to provide results to patients, and failure to label specimens.
In another recent case, a Florida lab owner pleaded guilty to perpetrating a $6.9 million Medicare fraud conspiracy involving COVID-19 testing. According to the DOJ, the law owner admitted to “paying kickbacks and bribes to obtain doctors’ orders for medically unnecessary lab tests that were then billed to Medicare . . . [and] exploit[ing] the COVID-19 pandemic by bundling COVID-19 testing with other forms of testing that patients did not need, including genetic testing and tests for rare respiratory pathogens.” The lab owner is currently awaiting sentencing and faces up to 10 years in federal prison.
Leading the federal government’s efforts to combat COVID-19 testing fraud is the DOJ’s newly-formed COVID-19 Fraud Enforcement Task Force. Established in May 2021, the COVID-19 Fraud Enforcement Task Force is tasked with, “marshal[ling] the resources of the Department of Justice in partnership with agencies across government to enhance enforcement efforts against COVID-19 related fraud.” Agencies partnering with the COVID-19 Fraud Enforcement Task Force include:
- Executive Office for United States Attorneys
- Federal Bureau of Investigation (FBI)
- Department of Labor (DOL)
- Department of the Treasury (including Internal Revenue Service Criminal Investigations (IRS CI))
- Department of Homeland Security (DHS)
- Small Business Administration (SBA)
- Special Inspector General for Pandemic Relief (SIGPR)
- Pandemic Response Accountability Committee (PRAC)
All Forms of COVID-19 Testing Fraud Present Risks for Investigations and Civil or Criminal Charges
As recent publicized investigations (including, but not limited to, those discussed above) show, the DOJ and other authorities are targeting all forms of COVID-19 testing fraud. The wide variety of potential allegations is among the factors behind the scope of the government’s enforcement efforts—combined, of course, with the grave risks of labs and testing companies providing inaccurate test results to patients.
Some examples of fraudulent practices targeted in the government’s crackdown on COVID-19 testing fraud include:
- Improperly Billing for COVID-19 Tests Provided to Uninsured Patients – While the federal government will pay for uninsured individuals’ COVID-19 tests, not all test providers qualify to obtain government reimbursements. Labs and testing companies must be enrolled with the U.S. Department of Health and Human Services (DHHS) and qualified to bill the relevant government healthcare benefit programs.
- Double-Billing Private Insurers and the Government – When COVID-19 testing patients have private health insurance, labs and testing clinics cannot bill both the private insurer and the government. However, double-billing has proven to be rampant during the pandemic.
- Double–Billing Patients and Third-Party Payors – There have been several reported cases of testing facilities telling patients that their insurance will cover their tests (which should be true), billing patients’ insurance companies, and then still sending bills to patients.
- Billing for Phantom Patients or COVID-19 Tests Not Performed – A significant number of the government’s COVID-19 testing fraud investigations to date have focused on cases involving phantom patients or COVID-19 tests not performed. In these instances, facilities are either billing for patients they haven’t actually seen, or taking patients samples but not testing them for SARS-CoV-2.
- Billing for COVID-19 Tests Without Providing Patients’ Results – When labs, clinics, and other testing sites perform COVID-19 tests, they are required to deliver the test results to their patients. Failure to do so is considered a form of COVID-19 testing fraud.
- Failing to Label Specimens and Follow Other Testing Protocols – Failure to label specimens and following other testing protocols disqualifies labs and other testing facilities from billing the government for reimbursements. Non-compliant facilities that bill the government can be prosecuted for fraud.
- Bundling COVID–19 Tests with Medically-Unnecessary Testing – Several laboratories and laboratory owners have faced prosecution during the pandemic for bundling COVID-19 tests with other tests that patients don’t need. In most cases, this bundling has involved genetic testing and other forms of testing with high reimbursement rates.
- Offering, Paying, Soliciting, and Accepting Improper Referral Fees – Laboratories and other testing facilities cannot offer referral fees or other financial incentives to doctors who refer patients for COVID-19 testing. Other types of improper financial relationships and marketing practices can lead to fraud charges as well.
- Fraudulent COVID–19 Testing Sites – The DOJ and other authorities are going after individuals and entities that establish fraudulent COVID-19 testing sites. These sites typically collect patients’ Medicare information and/or charge upfront fees, and then they take swabs with no intention or ability to test patients’ samples for COVID-19.
How Labs and Other Testing Facilities Can Prepare for (and Defend Against) COVID-19 Testing Fraud Investigations
Given federal and state authorities’ focus on combatting COVID-19 testing fraud, all labs and other testing facilities that offer SARS-CoV-2 testing need to be prepared for the possibility of an investigation. To this end, facilities that are offering COVID-19 tests to the public should:
Ensure Strict Adherence to Compliance Policies and Procedures
All labs and other facilities that offer COVID-19 testing must strictly adhere to a comprehensive set of compliance policies and procedures. These policies and procedures must address all aspects of their testing practices, from patient intake to test administration, and from billing private insurance companies to seeking reimbursement from Medicare.
Maintain Documentation of Testing and Billing Compliance On-Hand
Because of the high likelihood of facing government scrutiny, testing facilities should maintain documentation of testing and billing compliance on-hand. In the event of an investigation, being able to quickly demonstrate compliance will afford the greatest opportunity to resolve the inquiry efficiently and without risk of liability. However, labs and other testing facilities must also be careful to ensure that they are disclosing no more information than necessary.
Audit Their COVID-19 Testing Compliance To Date
When conducting COVID-19 testing fraud investigations the DOJ and other authorities are examining facilities’ billing and testing practices dating back to 2020. As a result, facility owners need to know if their personnel have made mistakes in the past that require rectification. If so, taking remedial measures proactively will greatly reduce the risks involved in facing a federal or state inquiry.
Engage Federal Healthcare Fraud Defense Counsel to Protect Them
Due to the challenges and risks involved with COVID-19 testing compliance, all labs and other facilities that offer testing to the public should work with experienced federal healthcare fraud defense counsel. Engaging experienced counsel to examine the facility’s compliance documentation and audit its compliance efforts to date affords the opportunity to make informed decisions backed by sound legal advice. Establishing a working relationship with experienced healthcare fraud defense counsel also affords the opportunity to engage counsel immediately in the event of a COVID-19 testing fraud investigation.
Our Healthcare Fraud Defense Lawyers are Available to Handle COVID-19 Testing Fraud Investigations Nationwide
If you have questions or concerns about facing a COVID-19 testing fraud investigation, we are here to help. Our federal healthcare fraud defense lawyers have been representing labs and other healthcare entities in COVID-19-related matters since the start of the pandemic. To schedule a confidential consultation at your convenience, call us at 888-680-1745 or tell us how we can contact you online now.
Dr. Nick Oberheiden, founder of Oberheiden P.C., focuses his litigation practice on white-collar criminal defense, government investigations, SEC & FCPA enforcement, and commercial litigation.