Two doctors, their addiction-recovery business and a drug-testing lab have agreed to pay $15.7 million to resolve allegations that they took part in fraud involving urine tests, according to U.S. Attorney Kerry B. Harvey.
The businesses billed federally-funded health programs such as Medicare and Medicaid for drug tests that were not necessary or were overpriced, the government claimed.
Those responsible for the payment are PremierTox 2.0 LLC; Addixxion Recovery of Kentucky LLC, which does business under the name SelfRefind; and Drs. Bryan Wood and Robin Peavler, according to a copy of the settlement.
Wood and Peavler owned SelfRefind and had an interest in PremierTox, a lab facility in Russell Springs, the settlement said.
SelfRefind operates centers that use buprenorphine to treat people who are addicted to opiates such as oxycodone, a painkiller that plays a role in hundreds of overdose deaths a year in Kentucky.
SelfRefind has its main office in Harrodsburg and operates clinics in Danville, Frankfort, Hazard, Middlesboro, Pikeville, Barbourville, Morehead and Carrollton, according to Harvey's office.
Clients of the clinics were required to take urine tests to make sure they were taking the buprenorphine as required and not abusing drugs. Suboxone is one well-known trade name for buprenorphine.
The government alleged that after Wood and Peavler bought an interest in PremierTox in 2010, they started a practice of requiring all urine samples that were screened at SelfRefind to also be sent to PremierTox for additional testing, regardless of the results of the first test.
The additional testing, which resulted in additional payment claims, often was not necessary, the government alleged.
In addition, the government claimed PremierTox submitted claims that incorrectly identified the type of drug test that was performed; the incorrect code had a higher reimbursement level.
The doctors and businesses did not admit liability in the settlement, which makes Wood, Peavler and SelfRefind responsible for $1 million each and PremierTox responsible for the remaining $12,750,000.
The state took part in the investigation and will receive $2.74 million from the settlement.
PremierTox also committed to making internal compliance reforms and submitting to an outside review of its claims to federal health care programs for five years.
An attorney for PremierTox, Anna Stewart Whites, noted that the settlement preserved the lab's right to do drug tests, calling the settlement "a hug win" for patients and treatment providers.
"Urine drug testing allows doctors to monitor patient use and compliance with treatment. It prevents overdoses and diversion," Whites said in a statement.
The settlement was the second in Kentucky in recent weeks in which the government recovered a substantial amount of money in a case involving alleged health care fraud.
The other involved the parent company of Saint Joseph Hospital London, which agreed to pay $16.5 million to settle claims that doctors at the hospital performed unnecessary heart procedures to pump up revenue.
Harvey said in an interview that his office reorganized three years ago to put greater focus on such fraud cases, assigning attorneys, an investigator and an auditor to the work.
The effort saves money for taxpayers and deters bad conduct, Harvey said, though he noted most health care providers do not take part in fraud.
Health care fraud drains valuable resources, contributes to higher costs and undermines the confidence people should be able to have that treatment providers are making decisions based on what's best for the patient, not the provider's profits, federal authorities said.
Harvey noted many Kentuckians rely on federally-funded programs for their health care.
"It's just vital that we protect the integrity and the solvency of these programs," he said.
The investigation that led to the settlement was conducted by the Kentucky Attorney General's Office, Kentucky State Police and Harvey's office.
Bill Estep: (606) 678-4655. Twitter: @billestep1