Millennium Wins FDA Contract Despite Fraud Charges

By Pat Anson, Editor

Just days after agreeing to pay $256 million to the federal government to settle fraud and kickback charges, Millennium Health has been selected to provide urine drug tests to the Food and Drug Administration for a clinical trial.

The trial will assess the development of opioid tolerance in patients taking pain medication with an abuse deterrent formula. Millennium could potentially make $1.6 million under the FDA contract.

"Long term opioid treatment can produce positive outcomes when prescribed and used appropriately, but they also carry risks that must be managed. UDT (urine drug testing) plays a critical role in aiding the clinician in evaluating patient safety. Millennium's selection as a service partner in this important initiative reflects our advanced technical and analytic capabilities and commitment to excellence," said Millennium CEO Brock Hardaway.

Millennium -- the nation’s largest drug testing company -- won the contract soon after it agreed to settle fraud charges under the Federal False Claims Act. Millennium was accused of bilking Medicare, Medicaid and other federal health care programs for a large number of medically unnecessary urine drug and genetic tests. The San Diego based firm was also accused of violating federal kickback laws by providing physicians with free urine “point of care” (POC) test cups if they referred more expensive laboratory testing to Millennium.  

“Millennium allegedly promoted indiscriminate and unnecessary testing that increased medical costs without serving patients’ real medical needs,” said U.S. Attorney Carmen M. Ortiz of the District of Massachusetts.  “A laboratory that promotes and knowingly conducts medically unnecessary drug testing operates unlawfully and squanders our precious federal health care resources.”

Under terms of its settlement with the Department of Justice (DOJ), Millennium will pay $237 million to settle claims for unnecessary urine and genetic tests. Millennium also entered into a corporate integrity agreement with the Department of Health and Human Services, and will pay $19.2 million to the Centers for Medicare and Medicaid Services to resolve issues over its billing practices. The government, in turn, will pay whistleblowers over $30 million for their help in building the case against Millennium.

“Millennium used a variety of schemes to cause physicians, including many of its biggest referrers, to routinely order excessive amounts of UDT (urine drug tests) for all patients (including Medicare and Medicaid patients) regardless of individual patient assessment or need. Millennium’s abusive practices included the use of physician standing order forms to encourage routine, excessive UDT, and the dissemination of false and misleading statements about drug abuse rates and the value of its testing,” the original government complaint said.

"While Millennium may debate some of the merits of the DOJ's allegations, we respect the government's role in health care oversight and enforcement,” said Millennium's Hardaway. “At the end of the day, it was time to bring closure to an investigation that began nearly four years ago. Millennium Health is currently a very different organization than we were in the past. We fully embrace our obligation to both commercial and publicly funded health plans to provide value to the health care system overall and ensure that doctors who order our testing solutions adequately demonstrate that those solutions are clinically necessary.”

After the settlement was reached, Moody's Investors Service downgraded Millennium's Health's corporate debt rating and said its rating outlook was negative.

"The downgrade reflects Moody's expectation that Millennium will complete a distressed debt exchange or file for Chapter 11 bankruptcy in the near term. Moody's is estimating that lenders will suffer material losses in the event of a default," Moody's said in a statement.

Millennium is not the first drug testing company to face fraud and kickback charges. Competitors Amertiox, Calloway Labs, Quest Diagnostics, and LabCorp have all faced similar charges and paid millions of dollars in fines.As a result of these cases, Medicare has proposed lowering its billing rates for diagnostic testing as early as 2016, moving to a flat-rate fee structure to prevent drug-testing companies from charging more by testing for more substances.

As Pain News Network has reported, urine drug testing grew into a lucrative $4 billion industry – what some call “liquid gold” – largely because so many doctors who treat addicts and chronic pain patients require them to submit to urine drug screens. In many cases, point-of-care tests are used, even though many experts consider them unreliable.