Attorney General Cameron Joins DOJ, Multi-State Coalition in $16 Million Settlement with MD Labs for Unnecessary Drug Testing

A team from the National Association of Medicaid Fraud Control Units participated in the settlement negotiations on behalf of the states.

FRANKFORT, Ky. (April 1, 2022) – Attorney General Daniel Cameron joined the U.S. Department of Justice (DOJ) and a multi-state coalition of attorneys general in a settlement with MD Spine Solutions LLC (MD Labs) and its principal owners Denis Grizelj and Matthew Rutledge for billing Medicaid for unnecessary drug tests.

The settlement resolves allegations that from January 1, 2015, through December 31, 2019, MD Labs improperly billed Medicaid for unnecessary urine drug testing. Under the settlement, the clinical laboratory has agreed to pay a minimum of $11.6 million up to $16 million, depending on the financial viability of the company, to resolve these allegations. Kentucky will receive as much as $2,170,350.87 but no less than $1,573,504.38.

“Fraudulently billing Medicaid for unnecessary medical services harms Kentucky Medicaid beneficiaries and taxpayers,” said Attorney General Cameron. “We joined the DOJ and a coalition of attorneys general in this settlement to halt these unscrupulous business practices and to ensure that funds are returned to Kentucky’s Medicaid program.”

The settlement stems from a whistleblower lawsuit originally filed in the United States District Court for the District of Massachusetts. The coalition’s complaint alleges that MD Labs violated the Federal False Claims Act by simultaneously performing two different drug urine tests, presumptive and confirmatory, and billing federal health care programs for these tests, knowing the presumptive test results were irrelevant for most health care providers.

The Kentucky Office of Medicaid Fraud and Abuse Control, within the Office of the Attorney General, receives 75 percent of its funding from the U.S. Department of Health and Human Services under a grant award totaling $4.6 million for the fiscal year 2022. The remaining 25 percent, totaling $1.15 million for fiscal year 2022 is funded by the Commonwealth of Kentucky.

A team from the National Association of Medicaid Fraud Control Units participated in the settlement negotiations on behalf of the states.

To view a copy of the settlement, click here.