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.