Enzo Biochem, Inc. And Enzo Clinical Laboratories Pay $3.5 Million To Resolve Civil Fraud Allegations

U.S. Attorney Loretta E. Lynch today announced that the United States and New York State have entered into a settlement agreement with Enzo Biochem, Inc., and one of its subsidiaries, Enzo Clinical Laboratories (collectively, “Enzo”), to resolve a case brought under the federal False Claims Act and the New York False Claims Act. The matter involves allegations that Enzo wrongfully input diagnosis codes into claim forms that it submitted for payment to the Centers for Medicare & Medicaid Services (“CMS”). Under the terms of the Settlement Agreement, Enzo will pay a total of $3,510,245.94 to resolve the investigation.

The investigation established that, from at least January 1, 2004 through the present, Enzo unlawfully input diagnosis codes into claims forms it submitted to CMS. Specifically, when a physician ordered tests to be performed at Enzo but did not submit a diagnosis code to go along with the order, Enzo employees would select and assign codes which they believed would be most likely to lead to reimbursement from CMS. Enzo did not – as it was required to do – go back to the physician to obtain the missing code. Through this unlawful practice, Enzo wrongfully obtained reimbursement from CMS.

The settlement followed a joint investigation by the United States Attorney’s Office for the Eastern District of New York and the New York Attorney General’s Medicaid Fraud Control Unit, who worked in partnership to uncover the wrongdoing and reach a resolution. U.S. Attorney Lynch thanked Attorney General Schneiderman and his staff for their cooperation in this case.

“The investigation uncovered evidence that Enzo was falsifying information in the claim submission process in order to inflate and secure reimbursements from CMS,” stated United States Attorney Lynch. “The Medicare and Medicaid systems serve our most vulnerable citizens, and those who seek to maximize their own profits at the expense of these critically important programs will be pursued to the fullest extent of the law.”

The investigation commenced with the filing of a qui tam complaint by Relator O and U 2011 Partnership LLP. Under the federal and state False Claims Act statutes, a private individual who has uncovered fraud against the government may file a suit in federal court on behalf of the United States and the State of New York. If the United States and the State are successful in resolving those claims, the individual who filed the complaint may receive a share

of the recovery.

The United States’ investigation was handled by Assistant U.S. Attorney Kenneth M. Abell and Trial Attorney David M. Finkelstein of the Commercial Litigation Branch, United States Department of Justice, with assistance from Affirmative Civil Enforcement Auditor Emily Rosenthal and Special Agent Jason S. Villeco of the Department of Health and Human Service’s Office of Inspector General. The state investigation was handled by Special Assistant Attorney General Carolyn Ellis.