Radeas LLC Agrees to Pay $11.6 Million to Resolve Allegations of Fraudulent Billing

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FILE PHOTO: Signage is seen at the United States Department of Justice headquarters in Washington, D.C.

BOSTON – A North Carolina-based clinical laboratory, Radeas LLC, has agreed to pay $11.6 million to resolve allegations that it submitted false claims for payment to Medicare for medically unnecessary urine drug testing (UDT).

According to the settlement agreement, Radeas admits that between January 2016 and September 2021, it regularly billed Medicare for medically unnecessary UDT. Specifically, Radeas performed and then billed Medicare for two types of UDT: presumptive testing, a relatively inexpensive test that quickly provides qualitative results, and confirmatory testing, an expensive test that is designed to confirm quantitatively the results of presumptive UDT. Radeas performed both types of tests at approximately the same time and then simultaneously submitted the results to health care providers. Absent any physician review of a presumptive UDT result there was often nothing to support the medical necessity of a separate, simultaneous confirmatory test. The settlement makes clear that Radeas’ confirmatory UDT was therefore frequently baseless. Yet, Radeas billed Medicare for these medically unnecessary lab tests. The government alleges this conduct violated the False Claims Act.

According to the settlement agreement, Radeas also admits that, between May 2013 and April 2021, it paid third-party sales organizations based on the volume of UDT referrals those sales representatives made to Radeas. The government alleges this conduct violated the Anti-Kickback Statute and the False Claims Act.

In connection with the settlement, Radeas has agreed to enter into a five-year Corporate Integrity Agreement with the U.S. Department of Health and Human Services, Office of Inspector General, which will include an annual arrangements review for compliance with the Anti-Kickback Statute and an annual claims review of Radeas’ claims to Federal health care programs by an Independent Review Organization.

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“Radeas billed Medicare for unnecessary urine drug testing that served no legitimate clinical purpose,” said United States Attorney Rachael S. Rollins. “This is serious conduct that improperly diverts funds needed to care for the most vulnerable, especially during this devastating pandemic. After the government began its investigation and confronted Radeas, we were able to resolve this matter for $11.6 million and return substantial funds to the Medicare program. Radeas did fully cooperate and acknowledge its improper practices. We commend Radeas’ responsible approach to this matter.”

“Clinical labs are expected to closely follow Medicare rules and bill properly,” said Phillip M. Coyne, Special Agent in Charge of the U.S. Department of Health and Human Services, Office of the Inspector General. “When that obligation is violated, government health care programs – and American taxpayers – pay the price. We are committed to protecting the integrity of our federal healthcare system.”

U.S. Attorney Rollins and HHS OIG SAC Coyne made the announcement. Assistant U.S. Attorney Abraham R. George, Chief of Rollins’ Affirmative Civil Enforcement Unit and Assistant U.S. Attorney Charles B. Weinograd, also of the Affirmative Civil Enforcement Unit, handled the matter.