Vampire Lab Turns To Old Trick To Grow Business: Physician Owned Labs

(Updated)

True Health Diagnostics, the new laboratory that bought the assets and adopted the business model of the disgraced and bankrupt laboratory company Health Diagnostic Laboratory (HDL), is turning to some old, unethical, and illegal tricks to grow its business.

As I’ve reported previously, one key to the spectacular growth of HDL laboratory involved surreptitious bribes to doctors– often in the form of excessive processing and handling (P&H) fees. In the wake of the government investigation of HDL and the company’s subsequent collapse this strategy is no longer viable.

Now evidence has emerged that True Health is turning to the old trick of physician owned laboratories to incentivize its physician customers. With few exceptions, physician owned laboratories are illegal. Dating to the late 1980s, the Stark law prohibits physicians from owning laboratories and other business entities from which they can benefit from self-referral.

“The real problem,” one industry veteran told me, “is the incentives and selling clinical tools and services, not as a way to benefit patient outcomes, but as a means to increase cash flow.”

Rumors have been circulating for months that True Health was engaging in various schemes to give financial incentives to doctors. I now have documents that offer an in-depth glimpse at the details of one of these schemes.

Connecting The Dots…

The documents originate from Travis Boulware, a Managing Partner at Boulevard Endeavors LLC. “We Are a Company of Passionate Drug Test Management People,” the company’s website proclaims in bold letters, though the rest of the website is an empty shell. Boulware formerly worked at Ameritox, a company that paid the US government $16 million in fines because, you guessed it, the company bribed doctors to use its tests.

It is probably not a coincidence that Chris Grottenthaler, the CEO of True Health, previously served as the VP of finance for Ameritox. Ameritox,  which specialized in drug testing, was a “pioneer” in the use of bribes to entice doctors to use their tests.

I received a copy of an email sent by Boulware to a doctor, offering the doctor Boulware’s help in setting up “Physician Owned Entities including laboratories.” This email shows how True Health and its partners have cooked up a toxic stew that combines the Ameritox drug testing scheme with the HDL cardiovascular risk testing scheme and additional services.

“The email describes at least five different ways the physician can order diagnostic procedures and lab tests for a range of issues, such as pain management, drugs-of-abuse testing, wellness, and heart/cardiovascular function,” explained Robert Michel, Editor-in-Chief of The Dark Report, an intelligence service covering the clinical laboratory industry. “The email further states that the physician can generate additional revenue per patient by adding these lab tests and diagnostic procedures to the medical practice—although that physician has never determined there is the clinical need for these lab tests and diagnostics before now.”

“This email illustrates how these companies are willing to push compliance with federal and state laws that define illegal types of inducements and kickbacks,” he continued. “These companies cannot profit unless the physician decides to begin ordering these lab tests and diagnostic procedures, which are often medically unnecessary. Not only is this a violation of the federal and state anti-kickback laws, but they put patients at risk of harm while increasing the cost of healthcare.”

In the email Boulware wrote to the doctor (click here to read the entire email message):

“Within the primary care scope of practice, it is common to send out many services without seeing any revenue back. After my review, I can present a few options to consider including but not limited to; Physician Owned Entity, in-house simple screening devices, and possibly looking at how diseases are managed from a clinic organizational structure.”

The Documents

Boulware included a number of documents that provide important details about the scheme:

There is a Non-Disclosure Agreement, about the lab company, called ESA Toxicology LLC, in which the doctor is being invited to invest for the purpose of referring specimens in the kickback scheme.

A chart showing the return on investment of a cardiac testing device, the Max Pulse, showing that doctors can make over $120,000 a year giving the test to 5 patients every day. (It should be noted here that there is currently no guideline-accepted indication for the widespread use of this device in clinical practice.)

A pro forma spreadsheet showing the business model of the toxicology testing physician-owned lab. This suggests that the physician can earn nearly $7,000 each month by referring his or her own patients to the lab.

A sample results form from True Health Diagnostics. It should be noted that these broad panels, like the very similar panels sold by HDL, have absolutely no legitimate indication in common clinical practice.

The point of all these documents is to demonstrate the financial benefits of these tests and devices to the doctor. Completely lost in the process is any concern for the patient.

Update, February 17–

In an apparent response to the letter sent by Boulware to the physician, a lawyer representing True Health Diagnostics sent a cease and desist letter to Boulware. In the letter, True Health denies any association with the revenue opportunity schemes proposed by Boulware or any affiliation between Boulware’s company and True Health.

The law firm representing True Health is Perkins Coie, according to the letterhead on the letter to Boulware. The lawyer’s name and address is redacted on the copy I received. According to an article in Richmond BizSense, a Perkins Coie lawyer, Eric Walker, represented Robert Bradford Johnson, one of the owners of BlueWave, the sales team closely tied to HDL. True Health has stated that the owners of BlueWave have no association with True Health, but, as the BizSense article reported, Johnson represented True Health at a trade show and True Health, a private company, has not disclosed the names of its owners. (As I reported recently the owners of BlueWave have had their assets frozen by the government.)

 

Previous Stories About HDL and True Health Diagnostics:

Related Documents:

 

Solicitation email from Travis Boulware

Solicitation email from Travis Boulware

 

Non-Disclosure Agreement [PDF]

MaxPulseDevice_ROI

Toxicology Testing Proforma

True Health Diagnostics Sample Results

True Health 2016-02-15 Cease and Desist to Boulevard_Redacted-2

 

 

 

Comments

  1. Jed Dinar says:

    And ESA toxicology continues to grow. Is there any legal backlash for physicians that use this group?

    • Jed Dinar says:

      Any response to Jed’s question? I’ve had several physician friends mention this group.

      • I am reporting to Fraud Dept. As I continued to investigate a 2nd doctor of mine sent urine to this lab April of 2015. My ins. paid them $15K!!!

  2. I’ve lost all respect for my doctor. I just received a bill for $2,321.20…for a routine urine test to make sure that I am not on drugs before refilling my prescriptions. Complete and Utter BS!!!! My lawyer is getting involved!

    • I have not got any bills from THD. However, they did file the claim to my insurance company in the amount of $7768. The claim was denied. I was shocked to see the claim when I saw the claim on my insurance website. I mean this was for routine physical check-up, how can a routine physical check-up be this high?

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