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United States ex rel. Drummond v. Bestcare Laboratory Services LLC

United States District Court, S.D. Texas

April 3, 2018

United States of America and the State of Texas ex rel. Richard Drummond, Plaintiffs,
v.
BestCare Laboratory Services, LLC, et al., Defendants.

          OPINION ON SUMMARY JUDGMENT

          Lynn N. Hughes United States District Judge

         1. BestCare.

         Karim Maghareh and his wife, Farzaneh Rajabi, founded BestCare Laboratory Services, LLC, in 2002. Maghareh owns 51% and Rajabi owns 49%. BestCare operates a diagnostic laboratory in Webster - a suburb of Houston -where it tests specimens mostly from disabled and elderly patients. In addition to its business in Houston, it has workers in Dallas, San Antonio, and El Paso. They collect specimens to be tested in Webster.

         BestCare billed Medicare for every mile a specimen traveled, even when (a) that specimen was not accompanied by a technician or (b) it was one of many samples collected in a single trip.

         BestCare's workers shipped specimens on flights to Houston for roughly $100 per batch. The workers did not travel from these cities to Webster with the specimens. Neither did they travel from Webster to Dallas, San Antonio, and El Paso to collect the specimens. A worker in Dallas, San Antonio, or El Paso collected the specimens and delivered them to the local airport. Someone from the Webster laboratory retrieved the batches from Houston's airport.

         When a technician did drive to other laboratories to collect samples, he collected several at a time, sometimes from multiple locations. BestCare billed these trips as though the samples were returned one-by-one to Webster when collected. Instead of prorating these trips as logic and the regulation require, it calculated the maximum number of miles a technician theoretically could have traveled to collect each specimen and return it to the laboratory.

         The court has decided that the government could recover from BestCare on its theories of unjust enrichment and payment by mistake. On the government's motion, it now considers BestCare's responsibility under the False Claims Act.

         2. Medicare.

         Title 18 of the Social Security Act establishes, among other things, government subsidized insurance for disabled and elderly Americans.[1] Under this Act, laboratories may bill the United States $1.00 per mile that their workers travel to collect specimens from patients.

         The fee covers "the transportation and personnel expenses" for a worker to travel to the patient to collect the sample and return.[2] It is "based on the number of miles traveled and the personnel costs associated with collection."[3]

         Axiomatically, to be eligible for a reimbursement, the laboratory must have paid an expense - the expense of a technician's travel to collect a sample. When BestCare had gathered the samples in El Paso to pack for shipping to Webster, the transportation for collection had been completed. Testing them 765 miles away was not required to collect them for the patients.

         3. Scheme.

         BestCare billed the United States $1.00 per mile for each specimen's trip from Dallas, San Antonio, and El Paso although its workers did not accompany the specimens. No. personnel costs were associated with these trips, because the specimen had already been collected. BestCare was paid, in other words, for travel expenses that its workers did not incur.

         BestCare also billed for each specimen separately by calculating the maximum number of miles that its worker could have theoretically driven to retrieve them. In reality, the worker retrieved many specimens in a single trip. He ...


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