Healthcare Marketing – Recent Lab Space Prosecution Activity

By: Jeff Cohen

The latest healthcare marketing prosecution in the Florida laboratory space came when criminal charges were filed against Mr. John Skeffington on December 6th.  The case is unique because it involves (a) purely commercially insureds (no governmental patients), (b) it is aimed entirely at marketing practices, and (c) is seems to target (the allegedly illegal contract was not attached) pure incentive compensation (percentage based in this case).  The case will certainly get a lot of attention, since it may be signaling enhanced federal enforcement of purely commercial payer arrangements sources, marketing activities, lab marketing relationships and percentage based compensation arrangements.

The allegations are very revealing.  They involve–

1. Labs that serve addiction treatment facilities, a very hotly targeted industry in South Florida;
2. Medically unnecessary lab testing;
3. Fraudulent testing;
4. A “cover up” involving a change of marketer compensation from percentage based comp to hourly compensation via backdated contracts (with backdated tax  documents and invoices);
5. Kickbacks paid to sober homes and addiction treatment centers by the charged defendant;
6. Kickbacks paid to the marketer by the marketer’s lab clients; and
7. The use of unrelated business accounts through which the marketing payments would pass.

The complaint contains some interesting implications as well, such as–

The complaint’s statement that a $5 point of care cup tests for 12 drugs, while an LCMS test can be billed in excess of $9,000 seems to suggest that they are the same thing, clinically speaking.  It also misses a point rarely addressed, which is that most addiction treatment related services are billed on an out of network basis, which means the insurance company alone unilaterally decides what to pay for the service (since there is no contractual agreement between the payer and the lab).  Though not new to press reports regarding the addiction treatment industry in South Florida, whether intentional or not, statements like these can be misleading.

It was also interesting to see the linkage between for instance PPACA (Obamacare) and the Federal Employees Health Benefits Program (FEHBP) and the commercial insurance industry, arguably laying additional groundwork for the issue of federal jurisdiction.

Finally, while the prosecution focuses on the activities of a lab marketer, the nexus to yet uncharged addiction treatment facilities whose physicians impliedly prescribed the allegedly fraudulent and unnecessary testing is left unaddressed.

The allegations in the case are ominous.  The potential consequences to the defendant are potentially huge.  Any healthcare business or true marketer doing healthcare marketing for any healthcare provider (not just labs or addiction treatment facilities) has to be extremely well informed of the laws, the options and the risks.