Horizon Blue Cross NJ Alleges Huge Drug Testing Fraud

Addiction Treatment Industry Newswire
09/12/2013 –ATIN – In a huge lawsuit that is already sending reverberations up and down the East Coast, and especially in the key South Florida addiction treatment drug rehab alcohol rehab marketplace, Horizon Blue Cross of NJ has filed a $36M civil fraud claim primarily it appears against drug tester Avee Laboratories, which the big non-profit commercial payor alleges hatched a scheme to induce providers, many of them no doubt addiction treatment centers, to generate income by performing unnecessary drug screen toxicity testing and then billing the giant insurer for those services.

No Surprise

To keen observers of the addiction treatment markets, the appearance of such a lawsuit should come as no surprise. Over the last several years, hugely generous urine testing reimbursements by health insurers in general has been the talk of the South Florida market and points north and west. Indeed much of the frenzied growth of Florida Model treatment operations throughout the state and elsewhere can be traced, many treatment executives have privately told Treatment Magazine, to the ease with which large testing reimbursements could be effectuated, with proceeds used to prop up treatment businesses that otherwise might not be viable. Ever since insurers signaled earlier this summer that the urine testing party was over, many have been predicting a possible shake out in East Coast markets, and especially in the South Florida market whose capacity in fact services much of the East Coast demand of the well-insured and cash-pay demographic. It is impossible to overestimate the importance of Horizon Blue Cross NJ, quite possibly the largest single payor into the South Florida “destination” addiction treatment marketplace.


A year ago at a Las Vegas conference, senior executives of Avee Laboratories were crowing about the drug tester’s rapid growth which they described as driven by a mix of aggressive acquisitions and organic sales efforts, with top sales and marketing executives claiming that Alere, a huge health care specialty services provider with interests in drug testing, cardiology, oncology and other areas, was now the largest provider of tox screen services to the addiction treatment industry. Alere, which also is named as a defendant in the suit, acquired Avee in late 2011 for $120M. The suit names only one addiction treatment center, Leading Edge Recovery of Trenton, NJ, as a co-defendant, claiming improper billing of $6M on the part of center, according to published reports. The suit names ten other health care providers as anonymous “John Doe” defendants, according to published reports, which may indicate the Horizon Blue Cross NJ may wish to focus attention on Alere/Avee.

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The above article was based on background-only interviews with former Alere employees, treatment center executives and published reports and Treatment Magazine has yet to hear from the parties to the lawsuit, one of the biggest commercial payor developments in recent addiction treatment industry history. Treatment Magazine is, of course, attempting to get a copy of the suit but has yet to hear back from court officials in Mercer County, NJ, where the suit was filed. We will be following developments and investigating, so stay tuned to this channel.

In the meantime… read our report on Urine Testing Reimbursement


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