Premiertox Pays U.S. and Tennessee $2.5 Million to Resolve False Claims Act Lawsuit

PremierTox 2.0, Inc. has paid $2.5 million to resolve alleged violations of the False Claims Act, announced David Rivera, United States Attorney for the Middle District of Tennessee.  PremierTox previously did business in Tennessee under the name Nexus and is a company that provides drug urine screening services to citizens of Tennessee and Kentucky. The government alleged that PremierTox submitted false claims when billing Medicare, TennCare and Kentucky Medicaid for drug urine screening services.

“Enforcement of the False Claims Act continues to be a top priority of the U.S. Attorney’s Office,” said U.S. Attorney David Rivera. “We will continue to intervene in these matters when the protection of taxpayers’ interest and integrity of our nation’s healthcare industry becomes necessary.”

The settlement resolves the government’s allegations that PremierTox and Nexus submitted three types of false claims during the period of September 2011 through June 2014, while PremierTox was under its former ownership and management. The government alleged that PremierTox had a swapping arrangement, in which Nexus gave below cost discounts on its urine drug screen tests to patients in Tennessee without insurance, in exchange for physicians’ referring their patients with Medicare or TennCare coverage to Nexus. The government also contended that, in Tennessee, Nexus submitted excessive claims to Medicare and TennCare for laboratory testing that was beyond what was medically reasonable and necessary. In addition, the government claimed that, in Kentucky, PremierTox provided point of care testing cups to medical offices free of charge to induce those providers to use PremierTox’s services.

“Our office will continue to work with our state and federal partners to combat healthcare fraud,” said Attorney General Herbert H. Slatery III. “In order to protect Tennessee tax dollars, it is imperative that we pursue those individuals attempting to take advantage of the system.”

Under the settlement agreement, PremierTox paid a total of $2,500,000.  Of that amount, $2,125,000 covers the conduct in Tennessee, and $325,000 covers the conduct in Kentucky. The United States will receive $1,757,300 under the settlement, and Tennessee will receive $325,200.

"Medically unnecessary lab tests and financial incentives from labs to doctors in exchange for referrals are costing the taxpayers millions of dollars," said Derrick L. Jackson, Special Agent in Charge at the U.S. Department of Health and Human Services, Office of Inspector General in Atlanta. "This settlement is one of many that are sending a strong message to the lab industry that they need to clean up their act."

The allegations resolved by today’s settlement were originally raised in two lawsuits filed against PremierTox in Tennessee and Kentucky under the qui tam, or whistleblower provision of the False Claims Act. This provision allows private citizens to bring civil suits on behalf of the government and to share in any recovery. 

The lawsuit in Tennessee was filed by a former office manager of a pain clinic in Cookeville. The relator in this case will receive $361,250. The relator who brought the lawsuit in Kentucky is the former CEO of PremierTox and will receive and $56,250.

The Tennessee lawsuit remains pending against several other defendants whom the United States and Tennessee allege violated the False Claims Act and the Tennessee Medicaid False Claims Act.  The remaining claims include allegations that Lenoir City chiropractor Matthew Anderson operated the Cookeville Center for Pain Management as a pill mill in which a nurse practitioner wrote prescriptions that Medicare and TennCare paid for, that had no legitimate medical purpose; and that Dr. David Florence likewise operated a pill mill at his Center for Advanced Medicine in Manchester, Tennessee.

This case was investigated by the U.S. Department of Health & Human Services Office of Inspector General and the Tennessee Bureau of Investigation Medicaid Fraud Control Unit.   The United States is represented in these cases by Assistant U.S. Attorneys Ellen Bowden McIntyre for the Middle District of Tennessee and Ben Schecter of the Western District of Kentucky.  The State of Tennessee is represented by Assistant Attorney General Phillip Bangle.

The two cases are docketed as United States ex rel. Norris v. Anderson, No. 2:13-cv-00035 (M.D. Tenn.) and United States ex rel. Duncan v. Nexus Lab, Inc., No. 1:14-cv-89-R (W.D. Ky.).  The claims settled by this agreement are allegations only, and there has been no determination of liability.