Bruce Vielmetti

Milwaukee Journal Sentinel

A Milwaukee clinic turned urine samples into liquid gold, cheating Medicaid out of millions of dollars by billing for duplicative and unnecessary drug screening tests, federal prosecutors say.

In fact, from 2011 to 2015, Acacia Mental Health Clinic LLC, 5228 W. Fond du Lac Ave., captured 99% of all Medicaid payments to mental health and substance abuse counseling providers in Wisconsin, according to a new government lawsuit that aims to claw back some of the money.

The U.S. Attorney's office sued Acacia and its owner, Abe Freund, under the federal False Claims Act, which provides recovery from fraudulent government contractors. The suit says Acacia took advantage of poor, undereducated and vulnerable residents suffering from mental health and substance abuse problems to bilk Medicaid.

The case highlights a local aspect of a national problem that grew alongside the opioid epidemic. At drug abuse treatment centers, operators increasingly turned to questionable urine screens as a revenue source. One of the nation's largest labs, San Diego, Calif.-based Millennium, last year agreed to pay $256 million under the False Claims Act to resolve claims that included drug screen fraud.

Under the law, every separate billing or statement to Medicaid is considered a separate false claim and can be subject to civil penalties of $5,500 to $11,000. The government can also recover triple damages.

According to the suit filed Wednesday in Milwaukee federal court, Freund bought Acacia in 2009 and then set out to sharply increase its Medicaid billings by adopting strict policies of how staff would handle patients.

"From January 2011 until October 2012, Acacia routinely submitted false claims that resulted in a $230 reimbursement for each drug screen when the proper reimbursement was only approximately $20 — and Acacia’s cost for the test was just $5," the suit claims.

"From there, Acacia’s scheme grew aggressively so that, by 2013, Acacia was obtaining an average of $474.66 per testing event. Based in large part on these false billings, Acacia’s overall Wisconsin Medicaid reimbursement grew from about $332,000 in 2011 to about $3.3 million in 2014, for a total of over $7.3 million from 2011 to 2014."

Reached at the clinic Thursday, Freund said he was unaware of the lawsuit, was in a meeting and would call a reporter back. Calls to Freund's attorneys on Friday were not returned.

Urine drug screens can be considered medically necessary, but only if a physician makes individualized prescriptions about the frequency of testing and specific drug types to be screened. Medicaid only pays for services deemed medically necessary and appropriate.

But at Acacia, Freund required every patient to provide a urine sample during every type of visit, whether they were being seen for substance abuse or mental health issues, the suit contends, and all the samples were tested for the same drugs.

'Up-coded' tests

Acacia used a simple "pee in a cup" test that indicates the presence of several drugs, which was reimbursable at $20, but "up-coded" the tests as more complex screens for more than a dozen specific drugs, thereby getting reimbursed more than $230.

In November 2012, Acacia bought a $40,000 analyzer and began billing for tests done with it as well as the simpler method even though both generated general results. That raised the amount Acacia got paid for the same sample to more than $300.

In August 2013, Acacia added a $200,000 analyzer and another one for $220,000 that December. The machines allowed the clinic to specify the types of drugs in a urine sample. Though it is not often medically necessary, Acacia began doing the more complex tests — and billing for them — on every urine sample taken at the clinic, even when the original test was negative, and even began billing for some tests that weren't done, the suit contends.

In all, the number of urine drug screens claimed by Acacia rose from 1,559 in 2011 to 8,997 in 2014, vastly more than any other mental health care outlet in Wisconsin. Payments rose from $179,191 in 2011 to $2.9 million in 2014, for a total of nearly $5.9 million — or 99% of state reimbursements to mental health and substance abuse providers in the state.

The suit also claims Acacia falsely billed for some psychiatric services.

Medicaid allows reimbursement for individual psychiatric therapy provided remotely via video, but not with doctors located outside the United States. From 2011 to 2014, Acacia billed Medicaid $489,052 for more than 10,000 claims of service provided by two doctors, Isaac R. Nagel and Matthew B. Medwick, who the government says lived in Israel.

Some of the billings were for group therapy provided when Nagel and Medwick were not in the U.S.

The government's suit follows a similar False Claims Act action filed by a whistle-blower in 2013. Rose Presser, an experienced nurse practitioner who worked at Acacia, claimed that the clinic was not only requiring excessive drug screens but also billed initial appointments as "assessments" and required too-frequent prescription refills. Acacia and Freund have denied the claims in that case.

When Presser sued, federal prosecutors noted they had decided not to intervene at that time, but would continue investigating and monitoring the case.

Presser's case remains pending in federal court in Milwaukee. If successful, she could receive up to 30% of money recovered for the government.