Company Turned Urine Testing Into Bogus Quarter-Billion-Dollar Medicare Revenue Stream

Friday, October 23, 2015
Liquid gold

Millennium Health in San Diego says on its website that they provide “comprehensive reports and clinical support” to health care providers. Well, perhaps the reports were a little too comprehensive.

The U.S. Department of Justice (DOJ) announced this week it had reached a $256-million settlement with the company over allegations it billed Medicare, Medicaid and other federal programs for unnecessary urine and genetic drug testing. The settlement ends a handful of lawsuits brought over the years by whistleblowers, who will get $31.8 million of the money.

Millennium is one of the largest urine drug testing companies in the world and it got there, in part, by testing senior citizens' urine for “angel dust” after they have been prescribed opioid pain medication. Seniors rarely test positive for the hallucinogenic phencyclidine hydrochloride.

In announcing the settlement, the DOJ said, “We will not tolerate practices such as the ordering of excessive, non-patient specific tests and the provision of inducements to physicians that lead to unnecessary costs being imposed upon our nation’s health care programs.”

However, the practices were tolerated in some quarters between January 2008 and May 2015 and are credited with leading to the company's meteoric rise.

Millennium's business model was said to revolve around the “Custom Profile” of tests it provided to doctors who needed urine analysis. Instead of identifying the specific tests necessary for a personal evaluation, as Medicare law requires, the standard profile included a battery of expensive exams for everyone.

The 2014 federal complaint against the company, formerly Millennium Laboratories, which encompassed the various lawsuits, documents a ruthless business culture that emphasized sales over any other considerations. The San Diego Union-Tribune said it included mention of a 2012 national sales meeting where a slide show featured pictures of competitors in body bags. The face of an ex-employee who was suing the company was displayed as a target at a shooting range.

The government said Millennium sales people signed up doctors by giving them free urine-testing supplies, which might be considered a kickback by some observers. The sales force bragged about making it rain “liquid gold.”

The Wall Street Journal said it heard from sources that the company owners, including private-equity firm TA Associates Management LP, plan to turn the company over to creditors, perhaps in a Chapter 11 bankruptcy, once it is through paying off the settlement. 

Under the settlement, the company must stock its board with independent directors, not family members and Millennium executives. No one will be accused of a committing a crime and Millennium will still be allowed to bill Medicare for services.

–Ken Broder


To Learn More:

Millennium Health Settles Federal Allegations for $256 Million (by Matt Jarzemsky and Christopher Weaver, Wall Street Journal)

Feds: Urine Screen Company Chased “Liquid Gold” (by Greg Moran, San Diego Union-Tribune)

Millennium Health Agrees to Pay $256 Million to Resolve Allegations of Unnecessary Drug and Genetic Testing and Illegal Remuneration to Physicians (U.S. Department of Justice)

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