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Recent FBI Search of COVID Testing Labs Highlights Ongoing Concerns for Providers

covid testing lab

The Federal Bureau of Investigation is executing search warrants at COVID testing labs across the country. This enforcement action is only the most recent in a long line of investigations targeting COVID-19 fraud.

What these Investigation Mean for Labs & Lab Owners

The COVID-19 pandemic caught the nation off-guard. Initially, healthcare providers were praised for their commitment to patient health and wellbeing and for stepping up to the front lines to fight the spreading pandemic. And for good reason, labs and other providers selflessly put their own safety on the line to process millions of tests. However, over time, federal agencies began to realize that the loosening of certain restrictions designed to facilitate testing may have opened the door to certain types of healthcare fraud during the pandemic.

One of the most aggressively prosecuted types of pandemic-related claims stems from COVID-19 testing fraud; however, there is a broad range of healthcare fraud claims being pursued by the state and federal governments. The U.S. Department of Justice has gone on record explaining that it is “remaining vigilant in detecting, investigating, and prosecuting wrongdoing related to the crisis.”

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Dr. Nick Oberheiden
Dr. Nick Oberheiden

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John W. Sellers

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U.S. Department of Justice

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Joanne Fine DeLena

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Joe Brown

Former U.S. Attorney & Former District Attorney

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Amanda Marshall
Amanda Marshall

Former U.S. Attorney

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Aaron L. Wiley
Aaron L. Wiley

Former Federal Prosecutor

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Roger Bach
Roger Bach

Former Special Agent (OIG)

Michael Koslow
Michael Koslow

Former Supervisory Special Agent (FBI)

Chris Quick
Chris Quick

Former Special Agent (FBI & IRS-CI)

Kevin M. Sheridan
Kevin M. Sheridan

Former Special Agent (FBI)

Ray Yuen
Ray Yuen

Former Supervisory Special Agent (FBI)

Dennis A. Wichern
Dennis A. Wichern

Former Special Agent-in-Charge (DEA)

Types of COVID-19 Healthcare Fraud Claims

The Department of Justice (DOJ) is committed to rooting out fraud and other illegal activity stemming from vulnerabilities in the system brought about by the COVID-19 pandemic. The DOJ provides some insight as to the types of cases it is currently looking for, which include:

  • COVID-19 vaccine fraud;
  • COVID-19 testing fraud;
  • Schemes related to COVID-19 stimulus checks;
  • Unauthorized insurance scams; and
  • Unauthorized and unsubstantiated treatment schemes.

Some of the violations state and federal law enforcement agencies are investigating include the following:

Performing Unauthorized or Unnecessary Procedures

While the state and local governments encouraged frequent testing, there is a limit the how often labs should process testing results for the same patient. Last year, the U.S. Department of Justice announced healthcare fraud charges against 14 providers related to COVID-19 fraud. Several of the defendants in these cases allegedly used patient information gathered through the normal course of treatment to bill Medicare for additional testing services that were either not authorized or not necessary. Many of these tests were not performed, and some pertained to patients who had died or never provided a testing sample.

Bundling of Unrelated Procedures

State and federal law enforcement agencies have opened investigations into several labs for requiring patients to undergo unrelated testing when obtaining a COVID-19 test. For example, last year in the Northern District of California, a provider required patients requesting a COVID-19 test to undergo an allergy test that was issued by the same manufacturer.

Inappropriate Use of COVID-Relief Funds

To help address the unanticipated burdens placed on labs and other healthcare businesses, the federal government made significant economic stimulus available in the form of PPP and EIDL loans. Many healthcare professionals accepted the terms of these loans, which may not need to be paid back, depending on the circumstances. However, more recently, the United States government is checking in on those parties who accepted these loans to ensure the funds are being used in the appropriate manner.

Illegal Kickbacks Related to Telehealth Referrals

Telehealth practices and related businesses experienced a major surge as a result of the pandemic, and most in-patient visits were not practical during the COVID-19 pandemic. To help connect patients with much-needed services, the government allowed “telehealth waivers” to those providers who would otherwise need to schedule an in-person visit with patients. However, as the government begins to review these waivers and the business practices of those companies that obtained them, it has found that many labs are involved in illegal kickback schemes with other healthcare providers.

Billing for Services Not Provided

While there are not yet any formal charging documents related to some of the recent arrests from lab owners across the U.S., it would appear that the company may face allegations that it failed to perform tests that it claimed were processed (and for which it billed the government). This would hardly be the first case to bring such allegations.

Dr. Nick Oberheiden, the founder of Oberheiden, P.C., a nationwide healthcare fraud defense firm, explains,

The COVID-19 pandemic created an emergent situation, resulting in an almost immediate—but temporary—loosening of the federal laws and restrictions governing almost all healthcare providers. However, now that much of the country is vaccinated and boosted, and the government has gotten a chance to catch up, all healthcare practitioners and businesses—especially clinical labs—are facing enhanced scrutiny. It is imperative that labs who question their compliance or receive word of a pending investigation take immediate action to protect themselves. The government has changed its tune when it comes to enforcement, and providers need to be prepared to defend their billing and testing procedures.

While the COVID-19 pandemic continues, seemingly in full force, providers are not being given the flexibility and leniency they once were. Thus, it is imperative that providers who are concerned about their compliance or believe they are under investigation immediately reach out to a healthcare fraud defense and compliance attorney for assistance.

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