BROOKLYN (CN) - One of the nation's largest urine drug testing labs hornswoggled Allstate by submitting claims for $1.2 million worth of unnecessary tests and phantom tests that never happened, Allstate claims in court.
Allstate Insurance sued Ameritox Ltd., several of its executives, and doctors on Feb. 25 in a 117-page complaint in Federal Court.
Allstate claims Ameritox pulled off a "billing fraud scheme" to generate claims and get money from patients in New York, New Jersey, Michigan, Pennsylvania, Florida and Kentucky, through bogus claims from patients who got pain medications prescribed to them after alleged car crashes.
Ameritox, based in Baltimore, claimed it was helping Allstate's patients to ensure that they were not abusing their prescription medications, but "in reality, the defendants encouraged and actively sought to generate as many referrals as possible regardless of the reason for the referral without a determination from the treating provider that each urine drug test performed was necessary for each patient," according to the complaint.
Allstate claims the defendants took kickbacks, made aggressive sales and lied to get "as many referrals of urine specimens for drug testing" for the company as possible.
It also accuses the drug testing company, which processes tens of thousands of urine samples weekly, of double-billing.
"Ameritox exploited its superior knowledge of esoteric laboratory practices and billing and took advantage of Allstate's lack of familiarity with the same to bill Allstate for urine drug tests that were never performed and/or were unnecessary," the lawsuit states.
All the claims were called necessary because of car collisions that may never have even happened, Allstate says. It says the scheme cost it $1.2 million in payments since at least 2007.
No-fault laws in the states at issue allow someone hurt in a car collision to recover damages regardless of who caused the crash.
"While the no-fault laws of these six states have some variation, all agree that an auto insurer is only required to reimburse for treatment that was actually rendered and that was medically necessary," according to the complaint. "Thus, Ameritox's practice of billing for unnecessary and duplicative urine drug testing ... renders it ineligible to submit and demand payment under the now-fault laws" of those states.
Ameritox executives went to great lengths to drum up business, Allstate says: They gave away urine testing cups, handed out gift cards and paid referral fees at $10 a pop as early as 2003.
Ameritox's scam "is almost indistinguishable from the conduct engaged in by one of Ameritox's largest competitors in the urine drug testing market," Millennium Health LLC fka Millennium Laboratories, which had to pay the federal government $227 million to settle similar charges, Allstate says in the complaint.
It says the Ameritox scam came to light after a 2007 federal lawsuit Florida, which settled with the United States for $16.3 million.
"Ameritox is aware that the practice of providing healthcare providers with free or below fair market value items and services to influence and induce referrals of lab specimens is unlawful," according to the complaint.
Allstate is represented by Richard D. King Jr. with Smith & Brink PC of Garden City, N.Y.
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