Pinnacle Laboratory Services has filed a countersuit against American Clinical Solutions (ACS) and three of its executives in which it alleges they have:
…devised and undertaken an unlawful “kickback” scheme under which they compete against Pinnacle by offering physicians illegal financial inducements in exchange for referrals of patient specimen for [urine drug testing]…
Background
ACS filed a lawsuit against Pinnacle in July 2014 in which it alleges Pinnacle engages in an illegal kickback scheme that “promises to provide physicians with hundreds of thousands of dollars annually”.
I cover the allegations in the suit in more detail here, but very briefly, ACS claims referring physicians, through a third-party billing company called Florida Medical Reimbursement Services (FMRS), receive money for every private health insurance-reimbursed urine drug toxicology (UDT) sample they refer to Pinnacle.
ACS alleges FMRS bills non-governmental payors for the UDT tests, and once it receives payment, sends $100 to Pinnacle and remits the remainder to the referring physician. Based on the amount of damages Pinnacle is seeking in another unrelated suit, ACS has determined Pinnacle is normally reimbursed about $300 per test on average, meaning the referring physicians receive approximately $200 per specimen they refer.
According to ACS, Pinnacle engages in this scheme in order to secure the referral of all government-reimbursed urine drug testing from these physicians, and has a “clear expectation” it will receive “full price reimbursement” for the government-reimbursed tests.
Pinnacle’s Counterclaims
Pinnacle claims the unlawful kickback scheme devised by ACS and its president Roger Brown, VP Brian Artze, and Senior VP of Sales and Marketing Thomas Engala consists of:
- Offering and providing free UDT services and substantially underpriced UDT services
- Disguising kickback payments as lease payments under leases entered into between ACS and referring physicians
- Placing free or substantially underpriced specimen “collectors” in referring physician offices to perform urine collection services as well as general administrative and clerical support free of charge
Pinnacle highlights the fact Millennium Laboratories (now Millennium Health) alleged in a 2011 lawsuit that has since been settled that ACS and Mr. Artze provided unlawful kickbacks by placing ACS-employed specimen collectors in referring physician offices.
In that suit, Millennium claimed the Florida Agency for Health Care Administration paid a surprise visit to a physician office in Lake Mary Florida and found “an ACS employee on the premises providing free assistance to the practice in violation of the law.”
Pinnacle says ACS uses the above scheme in order to:
…induce physicians and medical providers to use ACS’s services instead of Pinnacle’s services and/or transfer their UDT referrals from ACS to Pinnacle.
Pinnacle provides an example in which a laboratory supervisor at Williston Regional General Hospital, which sends its UDT testing to Pinnacle, testified during a May 18, 2015 deposition that an ACS employee offered Williston ten free UDT screens as “pilot samples”.
The counterdefendants’ alleged scheme violates the federal Anti-Kickback Statute and Stark Law as well as multiple Florida statutes and Administrative Code Rules. As a result, they have engaged in deceptive and unfair practices and unfair competition.
This conduct has caused numerous medical providers to switch from Pinnacle to ACS, and numerous others to choose ACS over Pinnacle initially, for UDT services. As a result, Pinnacle has suffered, and will continue to suffer, “substantial monetary damages and significant loss of business opportunities.”
In addition, Pinnacle alleges ACS “made and published defamatory remarks” to current and potential future Pinnacle customers that Pinnacle is engaged in illegal activity, and this has caused these customers to “terminate or reduce their business with Pinnacle and/or to do business with ACS instead.”
Counts
- Florida Unfair and Deceptive Trade Practices Act-Injunctive Relief
- Florida Unfair and Deceptive Trade Practices Act-Damages
- Tortious Interference with Contractual Relations and Business Relations
- Common Law Unfair Competition
- Defamation
- Civil Conspiracy
Pinnacle Comment
Yussuf Abdel-aleem
Mr. Yussuf Abdel-aleem, a partner at Joseph, Aleem and Slowik and one of the attorneys representing Pinnacle, had the following to say:
The laughable irony of this lawsuit is that, once discovery commenced, Pinnacle soon learned that ACS seemingly engaged in a pattern of unlawful behavior far worse than anything Pinnacle has been (wrongly) accused of committing. Indeed, as Pinnacle alleged in its Counterclaims, ACS was sued by Millennium Laboratories in 2011 for similar behavior, including violations of the federal Anti-Kickback Statute and a number of state healthcare fraud and abuse laws. Moreover, after filing their Complaint, ACS appears to have pursued laboratory services arrangements with physicians that are substantially similar to the Pinnacle arrangement that they claim is illegal and forms the basis of their lawsuit. These developments absolutely call into question ACS’s motives for filing this lawsuit altogether.
ACS Comment
Harold Morlan
Mr. Harold Morlan of Fisher Rushmer, representing ACS, was also kind enough to provide a comment (emphasis in original):
Thank you for your continuing interest in the American Clinical Solutions v. Pinnacle Labs et al. litigation and the legal and ethical issues raised by clinical laboratories making substantial payments to physicians for UDT referrals. The limited information and documentation Defendant Pinnacle has produced in discovery in this suit to date has established that Pinnacle has issued in excess of 160 checks to 19 physicians/practice groups totaling $4,756,775.47 between 12-2-13 and 5-18-15. The belated Counterclaim is completely without legal or factual merit, and is simply a futile attempt to distract attention from Plaintiff American Clinical Solutions’ efforts to challenge the impropriety of Defendants’ physician payment scheme. American Clinical Solutions is committed to pursuing this litigation and supporting the efforts of all health care providers and government regulators to promote transparency and ethical billing practices in providing quality patient care.
Pinnacle’s counterclaims against ACS are here.