Sonic Buys ProPath

by Jondavid Klipp | Jan 15, 2022 | Lab Acquisition, ProPath, Sonic Healthcare

Sonic Buys ProPath

Sonic Healthcare (Sonic) acquired 100% of ProPath Services (Dallas, TX) for an undisclosed price on December 17, 2021. ProPath had been one of the largest pathologist-owned anatomic pathology labs in the nation. ProPath’s annual revenue is approximately $110 million. Its 500+ employees, including ~50 pathologists, serve roughly 1,000 physicians and 26 hospital clients across 45 states.

ProPath was established as an anatomic pathology practice in 1966. Growth has been almost entirely organic, including the expansion into clinical laboratory services in 2017. In early 2020 ProPath acquired New England Tissue Issue, an AP company located in Massachusetts.

ProPath’s pathologists will join as colleagues with Sonic’s existing group of 330 pathologists in the US. ProPath’s leadership team, including Chairman and CEO Cory Roberts, MD, are expected to hold senior roles at Sonic Healthcare USA.

The acquisition of ProPath follows Sonic’s purchase of Aurora Diagnostics for $540 million in January 2019.

Coker Capital (Charlotte, NC) served as a financial advisor to ProPath, while Haynes and Boone LLP (Dallas, TX) provided legal services.

Toxicology Labs Average $475 Per Medicare Patient

by Jondavid Klipp | Nov 15, 2021 | Aegis Sciences Corp., Toxicology, Vitas Laboratory

Toxicology Labs Average $475 Per Medicare Patient

.The top 25 independent toxicology lab companies received an average of $475 of revenue per Medicare patient they served in 2019, according to data analyzed by Laboratory Economics from the Medicare Part B program.

The biggest toxicology lab in the country is Aegis Sciences Corp. (Nashville, TN), which received $47.8 million of Medicare payments for 387,812 tests provided to 117,943 patients in 2019 for an average of $405 per patient. Aegis billed an average of 3.3 CPT codes per Medicare beneficiary it served. Its three highest volume codes in 2019 were G0482 (drug test, definitive; 15-21 classes), CPT 80307 (testing for presence of drug) and G0481 (drug test, definitive; 8-14 classes).

Vitas Laboratory (Barling, AR) collected the highest average Medicare payment per beneficiary at $4,459. The company billed an average of 28 CPT codes per Medicare beneficiary it served. Its three highest volume codes in 2019 were G0483 (drug test, definitive; 22+ classes), CPT 80307
and CPT 80053 (comprehensive metabolic panel). The owner of Vitas Laboratory, Billy Joe Taylor, was recently indicted for allegedly defrauding Medicare.

Arkansas Lab Owner Indicted in $100 Million Billing Fraud

by Jondavid Klipp | Nov 15, 2021 | Fraud, Medicare, Toxicology

Arkansas Lab Owner Indicted in $100 Million Billing Fraud

A federal grand jury in the Western District of Arkansas has indicted Billy Joe Taylor, age 42, for an alleged scheme that billed Medicare for over $100 million dollars in fraudulent lab test claims between February 2017 and May 2021.

Taylor is the owner of several lab companies, including Vitas Laboratories (Barling, AR), Beach Tox (Torrance, CA), Nations Laboratory Services (Tecumseh, OK), Corrlabs (Southern Pines, NC) and Imaginus Diagnostic Laboratory (Spiro, OK).

Taylor allegedly used access to beneficiary and medical provider information from prior lab orders to submit fraudulent claims for urine drug tests, Covid-19 tests and respiratory pathogen panels, that were not actually ordered or performed. The complaint also alleges that hundreds of claims were submitted for beneficiaries after they had died or otherwise ceased providing samples.

Taylor used the proceeds of the fraud to live a lavish lifestyle, including purchasing numerous luxury cars, real estate, jewelry and guitars, according to the indictment.

Taylor is charged with 16 counts of health care fraud, and one count of engaging in a monetary transaction in criminally-derived property. Each of the counts is punishable by a maximum penalty of 10 years in prison. He is scheduled for his arraignment on November 23 before the U.S. District Court for the Western District of Arkansas.

MD Labs To Pay Up To $16 Million To Resolve Fraudulent Billing Allegations

by Jondavid Klipp | Nov 15, 2021 | MD Labs, Toxicology

MD Labs To Pay Up To $16 Million To Resolve Fraudulent Billing Allegations

Nevada-based MD Spine Solutions (doing business as MD Labs) and its two owners have agreed to pay up to $16 million to settle allegations that MD Labs submitted false claims to Medicare and Medicaid, according to the U.S. Department of Justice. The co-owners, Denis Grizelj and Matthew Rutledge, have admitted that MD Labs regularly billed federal healthcare programs for medically unnecessary urine drug tests (UDTs) between 2015 and 2019.

Typically, a relatively inexpensive UDT called a presumptive test will be used first to quickly determine the need for a confirmatory UDT. However, MD Labs had regularly performed and billed for both UDTs at the same time without physician-designated reflex orders in place. Since the presumptive test was no longer being used to call for secondary testing, many confirmatory UDTs were medically unnecessary, according to the DOJ.

The settlement states that MD Labs, Grizelj and Rutledge will pay the government no less than $11.6 million and up to $16 million based on MD Labs’ financial performance through 2026. CMS also temporarily suspended Medicare payments to MD Labs effective April 13, 2021 through November 3, 2021.

The DOJ’s case against MD Labs was initially set into motion in December 2018 by a whistleblower, Omni Healthcare (Melborne, FL), which will get 15% of the settlement amount. Omni Healthcare is a multi-specialty group with
seven offices located in the Orlando area.

The settlement amount is small potatoes compared with the total Medicare payments of $55 million that MD Labs received between 2015-2019, notes Laboratory Economics.

Enzo Biochem Hires New CEO; Investors Push For More Change

by Jondavid Klipp | Nov 15, 2021 | Enzo Biochem

Enzo Biochem Hires New CEO; Investors Push For More Change

Hamid Erfanian, age 52, has become Chief Executive Officer Enzo Biochem (New York City) effective November 8. Erfanian was most recently Chief Commercial Officer of Euroimmun, an IVD manufacturer owned by PerkinElmer (Waltham, MA). Former CEO Elazar Rabbani, PhD, age 78, will remain Chairman and will also serve as Enzo’s new Chief Scientific Officer.

Erfanian is set receive a base salary of $600,000 with eligibility for a bonus of between 30% and 100% of his base salary. Furthermore, Erfanian will receive 260,000 shares of Enzo stock plus options to purchase 700,000 more shares. Finally, he will get $60,000 for relocation expenses.
Restless Investors Seek More Change
Meanwhile, Bradley Radoff, a private investor who owns 7.5% of Enzo’s outstanding shares, says the CEO change does not go far enough. In an open letter to Enzo’s board, he said the shift was merely a way to prolong the 45-year tenure of Rabbani, who helped found Enzo in 1976. Radoff
is urging the board “to take swift action to prevent Dr. Rabbani from perpetually controlling the company, as if it is his own private fiefdom.”

Rabbani did not receive a majority of shareholder votes cast for his re-election at Enzo’s last annual meeting in January 2021. However, Enzo’s board refused to accept Rabbani’s resignation and he remains Chairman.

Other Enzo investors, including Harbert Discovery Fund (10.7% stake), Roumell Asset Management (6% stake), and James Wolf (5.4% stake), have also been pressuring the company to make changes (see LE, January 2021).