Legal Fight Escalates in Drug Testing Industry

Legal Fight Escalates in Drug Testing Industry

In an escalating war of words between two of the nation’s largest drug screening companies, Ameritox blasted Millennium Labs for a “steady flow of propaganda” about the business practices of Ameritox and its competitors.

In a recent interview with American News Report, Millennium president Howard Appel claimed that kickbacks and other fraudulent schemes were rampant in the drug testing industry and warned that “reckless laboratories” were putting patients at risk. He did not mention Ameritox by name, but said one of the “flagrant violators” was in Baltimore, MD. Ameritox is headquartered in Baltimore.

Ameritox said it had no choice but to respond to the allegations, referring to Millennium by its California location. “That our San Diego competitor seeks to reinvent history is inappropriate business behavior. Customers rely on accurate and truthful information to make good decisions for patients and anything less is shameful,” said Ancelmo Lopes, CEO of Ameritox.

This week Ameritox amended a lawsuit against Millennium in federal court in Florida, alleging that Millennium’s marketing of urine drug tests violated the federal Lanham Act, as well as several state laws. Ameritox claims that Millennium deceptively promoted its services to health care providers and offered them illegal financial incentives, in violation of anti-kickback statutes in Florida, Arizona, California, New Hampshire, Texas and other states.

The Ameritox lawsuit claims Millennium “effectively corrupts the health care provider’s decision-making process by improperly introducing enormous financial incentives that mislead health care providers into believing that it is lawful for them to accept illegal inducements.” Ameritox also alleged that Millennium encourages physicians to retest negative drug samples, allowing it to charge additional fees for unneeded services. 

Millennium  categorically denied the allegations by Ameritox, calling it a rehash of an earlier lawsuit.

“Each week seems to bring from them a new lawsuit or accusation against someone or some company in our industry,” said Martin Price, Millennium’s general counsel. “It’s important to note that this is merely a sideshow to distract attention from the one lawsuit Millennium has filed against Ameritox.”

Millennium’s lawsuit, which is scheduled to come to trial next month, alleges that Ameritox used a misleading marketing campaign to promote a drug test that can tell physicians if their patients are taking medications at the proper dosage and frequency.  “The science simply doesn’t support those advertising claims,” Price told American News Report.

Lawsuits and illegal kickbacks are hardly new in the highly competitive drug test industry. In 2010, Ameritox agreed to pay $16.3 million in fines to the federal government to settle charges that it gave kickbacks to doctors. A whistleblower lawsuit filed by an Ameritox sales representative alleged the company made cash payments to physicians for drug test referrals and also placed personnel in doctors’ offices to collect urine samples for drug tests that were then billed to Medicare. Ameritox says its business practices have changed since the settlement.

Another large drug screening company, Calloway Laboratories, recently agreed to pay $20 million to settle charges in Massachusetts that it defrauded Medicaid with a kickback scheme that included sham companies, fake doctor signatures, and unneeded urine tests for drug addicts.

In an effort to clean up the drug screening industry in Florida, Millennium is encouraging Governor Rick Scott to sign a bill that would toughen the rules against kickback schemes. That lobbying effort is being questioned by Ameritox – which claims Millennium gave $20,000 in political contributions to Florida lawmakers to pass legislation that would benefit Millennium. A Millennium spokesman doesn’t dispute that figure, but said it amounts to just a fraction of what Ameritox spends on lobbying.

Authored by: Pat Anson, Editor