For Immediate Release - February 11, 2010

Attorney General Martha Coakley's Office Reaches $450,000 Settlement with Clinical Laboratory

Agreement Resolves Allegations of Medicaid Fraud

BOSTON - Today, Attorney General Martha Coakley's Office reached a settlement agreement with System Coordinated Services, Inc., doing business as Life Laboratories, a clinical laboratory in Springfield. The settlement resolves allegations of Medicaid fraud and is the result of an ongoing industry-wide investigation by the Attorney General's Medicaid Fraud Division into urine drug tests billed by independent clinical laboratories to the state Medicaid Program. Under the agreement, the laboratory has agreed to reimburse $450,000 to the state Medicaid Program.

"Overbilling the state's Medicaid Program for unnecessary services cheats taxpayers and takes money away from the people that need the funding the most," said Attorney General Coakley. "We will continue to work with our state and federal partners to police fraud, waste and abuse of a program that so many people depend on."

The Attorney General's investigation of Life Laboratories found that between 2004 and 2009, Life Laboratories, as well as a number of other independent clinical laboratories in the state, had billed Medicaid for urine drug and alcohol tests which were not properly ordered by a doctor or authorized prescriber, and were inappropriately ordered for non-medical purposes, such as residential sobriety monitoring. In order for a provider to be reimbursed by the Massachusetts Medicaid Program for urine drug and alcohol tests, the tests must be ordered by an authorized prescriber for medically necessary purposes.

In addition, the investigation found that Life Laboratories had overcharged the state Medicaid Program for these urine drug and alcohol tests, by failing to give the Medicaid Program its "best price." These alleged violations of state law and Medicaid rules and regulations resulted in significant Medicaid overpayments to Life Laboratories.

In addition to reimbursing the state Medicaid Program in the amount of $450,000, Life Laboratories has also agreed to comply with all state laws and Medicaid regulations in the future.

Attorney General Coakley's office has established itself nationally as a leader in the fight against fraud, waste and abuse in the Medicaid program. The office's Medicaid Fraud Division works to prevent and if necessary, prosecute provider fraud and violations of state law pertaining to fraud in the administration of the Medicaid Program. The division often works collaboratively with other enforcement authorities in other states, as well as with federal enforcement authorities. Since Attorney General Coakley took office in 2007, the Medicaid Fraud Division has recovered over $125 million dollars for the Massachusetts Medicaid program. In 2009, the division achieved its third consecutive year of record-breaking recoveries, returning $51.6 million to the Medicaid Program, including multi-million dollar settlements with such pharmaceutical giants as Astra Zeneca, Eli Lilly & Co., and Pfizer Inc.

This matter was investigated by Joseph Shea and Janine Queenin of Attorney General Martha Coakley's Medicaid Fraud Division and prosecuted by Assistant Attorneys General Toby Unger and Michael Ahearn, also of the Medicaid Fraud Division.