Testing labs still under fire: Millennium agrees to settlement with government

The drug testing industry continues to be rocked by upheaval caused at least in part by stepped-up government scrutiny of federal payments for lab tests. It was learned on Oct. 19 that San Diego-based Millennium Health will pay the government $256 million to settle allegations that it billed Medicare for unnecessary drug and genetic tests and encouraged physicians to order excessive testing.

The size of the settlement confirmed to some observers that the federal government has gotten serious about studying the significant federal money that has been spent on lab services.

The Wall Street Journal reported this week that those familiar with the government's case regarding Millennium foresee a possible bankruptcy filing by the company. Company owners, which include private equity company TA Associates, intend to turn Millennium over to its lenders as part of an agreement to restructure Millennium's debt.

This week's news comes on the heels of this month's announcement of the closing of Massachusetts drug testing company Calloway Labs, a company that also has been at the center of controversy over improper federal payments.

The government's case against Millennium emanated from whistleblower suits against the company. The government stated that from 2008 through May of this year, Millennium persuaded doctors to order a broad range of tests in a blanket fashion rather than to match test orders to the needs and profiles of individual patients. Also, it alleged that Millennium provided drug testing kits to doctors in exchange for a promise that the physicians would send requests for substantial testing to Millennium, an action that the government considered to be in violation of anti-kickback statutes.

Millennium officials said in a statement that while they disagree with some of the government's allegations, they wanted to end the dispute and focus on the effort to maintain the continuity of their business operations.

An attorney with Health Law Partners told Modern Healthcare this week that the settlement represents a large sum for this segment of the healthcare industry. “I think it will send a message certainly,” said Clinton Mikel. “The government is cracking down on labs.”