Drug screening is a growth industry in the United States. And so are the lawsuits and countersuits being filed by some of the nation’s drug test companies against each other.
This week Millennium Laboratories sued Ameritox for libel in California federal court, alleging the nation’s largest drug screening lab made false and misleading statements about Millennium’s business practices. The lawsuit is the latest chapter in an escalating feud between the two companies – as they battle for their share of a growing test industry worth an estimated $2 billion annually.
Millennium’s latest lawsuit against Ameritox stems from a press release issued by Ameritox last week, in which it claimed that Millennium encouraged doctors to retest negative drug samples, allowing it to charge additional fees. Ameritox also alleged, in a lawsuit of its own, that Millennium gave illegal kickbacks to doctors for referring business to the company.
In its lawsuit, Millennium denied giving kickbacks or having a standing practice to retest negative drug samples. It accused Ameritox of a “smear campaign” and said the Baltimore based company was “notorious for engaging in fraudulent business practices to gain a competitive advantage.” In 2010, Ameritox paid $16.3 million in fines to the federal government to settle charges that it gave illegal kickbacks to doctors.
Asked to comment on the Millennium lawsuit, Ameritox released a brief statement to American News Report, saying “instead of focusing on physician services and client care, Millennium Laboratories is instead focused on filing as many lawsuits as possible against competitors in the industry.”
Martin Price, Millennium’s general counsel, calls the recent Ameritox actions a “sideshow” to distract attention from yet another lawsuit that is coming to trial next month. In that case, the San Diego based company alleges that Ameritox used a misleading marketing campaign to promote Rx Guardian, 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.
The number of drug screening tests has soared in recent years, as many doctors require patients on pain medications to submit to drug screens as a condition for receiving prescription painkillers. According to a recent study, the number of drug screening tests billed to Medicare by family practice doctors soared from a few dozen in 2000 to over a quarter of a million tests by 2009.
As the testing industry has grown, so have the abuses, kickback schemes and fraud.
“The great majority of labs that have entered this space in the last 5 years have focused and promoted their services based on how much money the doctors can make, while significantly increasing the need for and amount billed for confirmation testing,” one industry insider told American News Report. “This has increased the cost of a test from $300 to $2,000-$3,000 and decreased the quality of the test being run so the doctor doesn’t always have accurate test results.”
At least two national drug labs, Quest Diagnostics and LabCorp, are under congressional investigation for a multi-billion Medicare scam, as recently reported in the trade publication The North Report. Quest and LabCorp allegedly gave kickbacks to insurance companies in the form of discounted lab fees. In return, the insurers encouraged doctors in their networks to refer drug tests to Quest and LabCorp, which then billed excessive charges to Medicare and Medicaid.