Kentucky doctors, related addiction clinic and laboratory, settle False Claims Act, Stark allegations for $15.1 million

by Ben Vernia | February 17th, 2014

On February 10, two Eastern Kentucky physicians, the addiction clinic and laboratory they owned agreed to pay over $15 million to resolve allegations that they submitted false claims to federal and state health care programs for unnecessary testing services. According to DOJ’s press release:

SelfRefind, a chain of addiction treatment clinics, PremierTox LLC, a clinical laboratory that performs urine testing and Drs. Bryan Wood and Robin Peavler, the owners of SelfRefind and PremierTox, have agreed to pay $15.75 million to resolve allegations that they violated the False Claims Act by submitting claims to Medicare and Kentucky’s Medicaid program for tests that were medically unnecessary, more expensive than those performed or billed in violation of the Stark Law, the Department of Justice announced today. SelfRefind provides addiction services to Medicare and Medicaid beneficiaries in 12 locations across Kentucky.
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In December 2010, Wood and Peavler each purchased a 20 percent ownership stake in PremierTox, a new, independent clinical laboratory created to perform urine drug testing. The government alleged that, after Wood and Peavler became owners of PremierTox, SelfRefind began referring comprehensive urine drug screening tests to PremierTox that were unnecessary and many times more expensive than other suitable alternative tests. The government also alleged that PremierTox submitted to Medicare and Medicaid inflated claims that misidentified the class of drug being tested and billed for tests that were referred by SelfRefind in violation of the Stark law. The Stark Law forbids a laboratory from billing Medicare and Medicaid for certain services referred by physicians that have a financial relationship with the laboratory.

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