Two Wisconsin labs offering scientifically questionable tests agreed last week to pay $8.5 million to the federal government to settle allegations that they falsely billed Medicare.
Pharmasan Labs Inc. and NeuroScience Inc., allegedly used improper codes to bill the federal insurer for ineligible food-allergy tests for five years, according to the U.S. Attorney’s office in Madison, Wisconsin.
The settlement, which also includes the labs’ founders, Gottfried and Mieke Kellermann, stems from a 2013 whistleblower lawsuit by a former employee that the federal government joined last year.
The companies neither admitted or denied the allegations. Pharmasan also acknowledged in the settlement that the government could prove the bulk of its lab-test referrals came not from doctors, as is largely required under Medicare, but from ineligible health care providers.
Pharmasan offers diagnostic tests for allergies, Lyme disease, immune-related and other conditions; NeuroScience is a related corporation that bills Medicare for those tests. Since NeuroScience was incorporated in 2000, its website indicates the labs have conducted more than 600,000 tests that are available in 24 countries. The settlement includes a requirement for them to undergo an independent annual claims review.
A Lyme disease diagnostic test Pharmasan offers is prohibited from being used in New York State, which says the lab did not prove the test accurately diagnoses the tick-borne disease. New York is one of the only states that reviews diagnostic tests. NECIR wrote about that test in 2014.
Pharmasan and NeuroScience are dedicated to helping patients and “we are glad to resolve these issues with the government and be moving forward,” Gottfried Kellermann said in a statement.
The whistleblower, Richard Forrest, said “at the end of the day the truth came out.” Forrest will receive more than $1 million as his share of the whistleblower suit against the companies, according to the government.
Forrest’s lawyer, Mark Schlein, of Baum, Hedlund, Aristei & Goldman in Los Angeles, said the labs had a choice between litigating to uphold their innocence or settling, and decided to settle.
Some of the tests that Pharmasan offers are part of a class that do not have to prove they are accurate or safe to the U.S. Food and Drug Administration. The FDA has recently reiterated its resolve to more strictly regulate the sector.