Michigan Lab Coughs Up $6.5M to Settle COVID-19 Test Billing Fraud Claims

Orchard Laboratories Corporation agreed to a settlement of $6,494,290.00 to resolve allegations that it violated the False Claims Act.

From April 4, 2022—May 11, 2023, Medicare paid for up to eight over-the-counter COVID tests per month for eligible beneficiaries. Individuals did not need a prescription to be eligible for the free tests, but they did need to affirmatively request the tests from an eligible provider.

Eligible providers included physicians, pharmacies, and laboratories. Orchard was a clinical reference laboratory that participated in the OTC COVID-19 test program.

The United States began investigating Orchard after it received complaints alleging that Orchard had improperly billed for OTC COVID tests that were never requested or received by the beneficiary. This settlement resolves allegations that Orchard billed Medicare for OTC COVID tests that were never delivered during the period from March 1, 2023, through May 11, 2023.

Gorgon was joined in the announcement by Jennifer Runyan, Special Agent in Charge, Federal Bureau of Investigation, Detroit Division, and Thomas Ethridge, Special Agent in Charge of the U.S. Dept. of Health and Human Services Office of Inspector General (HHS-OIG).

“The False Claims Act is an important tool to combat fraudulent medical billing,” said U.S. Attorney Jerome F. Gorgon Jr. for the Eastern District of Michigan. “Our office is coming for healthcare providers who cheat the government.”

The resolution obtained in this matter was the result of a coordinated effort among the United States Attorney’s Office for the Eastern District of Michigan, the Federal Bureau of Investigation, and the U.S. Department of Health and Human Services – Office of the Inspector General.

“Today’s settlement reinforces our steadfast commitment to protecting the integrity of federal health care programs and ensuring accountability when violations occur,” said Special Agent in Charge Thomas Ethridge of the U.S. Dept. of Health and Human Services Office of Inspector General (HHS-OIG). “We remain dedicated to safeguarding taxpayer dollars, and we will continue to work with our law enforcement partners to uphold the trust placed in us by the public.”

The matter was handled by Assistant United States Attorneys John Postulka and Gregory Dickinson from the U.S. Attorney’s Office for the Eastern District of Michigan.

“Protecting taxpayer-funded healthcare programs is essential to preserving public trust and ensuring federal healthcare dollars are used as intended,” said Jennifer Runyan, Special Agent in Charge of the FBI Detroit Field Office. “Healthcare providers entrusted with federal healthcare dollars have a responsibility to bill honestly and accurately. I commend the outstanding work of the members from FBI Detroit and HHS-OIG resolving this matter.”

On April 7, the Department of Justice announced the creation of the National Fraud Enforcement Division (Fraud Division). The Fraud Division is laser-focused on investigating and prosecuting those who commit fraud against the American people.  The Department’s work to combat fraud supports President Trump’s Task Force to Eliminate Fraud, a whole-of-government effort chaired by Vice President J.D. Vance to eliminate fraud, waste, and abuse within Federal benefit programs.

The investigation and resolution of this matter illustrate the government’s emphasis on combating healthcare fraud. One of the most powerful tools in this effort is the False Claims Act. Tips and complaints from all sources about potential fraud, waste, abuse, and mismanagement can be reported to the U.S. Department of Health and Human Services at 800-HHS-TIPS (800-447-8477).

The claims resolved by the settlement are allegations only; there has been no determination of liability.

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