Drug Testing Lab May Settle With Government for $250 Million

By Paul Gaita 06/19/15

Millennium Health is accused of conducting expensive and unnecessary testing.

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San Diego-based drug testing laboratory Millennium Health LLC is negotiating with the federal government to settle improper billing allegations that may cost the company as much as $250 million in fines.

The settlement, which is the latest in a series of financial and legal setbacks for the laboratory giant, is the culmination of a three-year investigation. The Department of Justice, Department of Health and Human Services, Office of the Inspector General and the Centers for Medicare, and Medicaid Services looked into allegations that Millennium Health performed unnecessary tests on patients that incurred huge costs that were billed to Medicare.

According to the investigation, Millennium conducted low-cost drug tests on patients and then re-tested the results with a second and more expensive test, even in cases where a second test was not required. Testing for multiple substances at once can cost labs up to $1,000 a test, which elevated costs by almost 2000% over a six-year period, the majority of which was billed to Medicaid.

However, cases such as the Millennium investigation, and settlements made by Health Diagnostic Laboratory over billing practices have spurred the government to install new regulations, including a lump sum fee cap for tests.

News of the negotiations comes at a particularly precarious time for Millennium’s finances. The company has experienced a 31% decline in one measure of its first-quarter earnings, while its $1.8 billion loan tumbled to 52.1 cents on the dollar, or less than half of its face value.

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Paul Gaita lives in Los Angeles. He has contributed to the Los Angeles Times, Variety, LA Weekly, Amazon.com and The Los Angeles Beat, among many other publications and websites.