Healthcare Company and Lab Pay $845K to Resolve Federal and State False Claims Act Allegations

U.S. Attorney John H. Durham and Special Agent in Charge Phillip Coyne of the U.S. Department of Health and Human Services, Office of the Inspector General, today announced that SECON OF NEW ENGLAND, LLC, d/b/a SECON LABORATORIES, and STERLING HEALTHCARE OPCO, LLC, d/b/a CORDANT HEALTH SOLUTIONS (collectively, “Cordant”) have entered into a civil settlement agreement with the federal and state governments and have paid $845,108 to resolve allegations that they violated the federal and state False Claims Acts.

Cordant Health Solutions, which is based in Denver, Colorado, provides healthcare testing and monitoring services nationwide, including laboratory services for drug testing. Cordant’s subsidiary, Secon Laboratories, is a laboratory located in Worcester, Massachusetts.  Secon’s client, Crossroads, Inc., was a behavioral health residential treatment center located in New Haven, Connecticut.  Many of the residents of Crossroads were enrolled in the Connecticut Medicaid program.

In 2015, Crossroads implemented a policy requiring its residents to submit to regular urine drug testing, largely for residential monitoring purposes.  Crossroads ordered presumptive (screening) drug tests and definitive (confirmatory) drug tests for each resident weekly.  In many cases, Crossroads ordered duplicative tests for its residents more than two times a week, and as often as three, four, or five times a week.  These drug tests were performed by Cordant, and were billed by Cordant to Connecticut Medicaid.

The government alleges that Cordant knew or should have known that the tests that Crossroads ordered for its residents more than two times a week were not medically necessary.  The United States and the State of Connecticut contend that Cordant failed to report and return overpayments for the claims Connecticut Medicaid paid Cordant for performing these medically unnecessary tests.

To resolve allegations under the federal and state False Claims Acts, Cordant has paid $845,108 to the government for overpayments occurring between October 6, 2015, and February 8, 2017.

“Government funded tests must be ordered based on each patient’s medical needs,” said U.S. Attorney Durham.  “Laboratories have a responsibility to ensure that the claims they submit to government health care programs are for medically necessary testing services.  If a laboratory discovers that it has performed and billed for tests that were not medically necessary, it has a duty and to report and return any overpayments, and to modify its practices.”

“This settlement demonstrates OIG’s commitment to ensuring that taxpayer dollars are not wasted on medically unnecessary services,” said Special Agent in Charge Phillip M. Coyne of the U.S. Department of Health and Human Services, Office of Inspector General.  “I appreciate the continued partnership between our Office, the Connecticut U.S Attorney's Office and the Connecticut Attorney General’s Office to investigate fraud and to protect public funds.”

This matter was investigated by the Office of the Inspector General for the Department of Health and Human Services, and the Connecticut Office of the Attorney General. This case was prosecuted by Assistant U.S. Attorney Sara Kaczmarek, and by Assistant Attorney General Gregory O’Connell of the Attorney General’s Office.

People who suspect health care fraud are encouraged to report it by calling 1-800-HHS-TIPS or the Health Care Task Force at (203) 777-6311.