State audit finds the lab billed for drug tests without required physician signatures in nearly a quarter of reviewed instances.
Sunrise Clinical Lab LLC must repay New Jersey Medicaid $3,437,006 after an audit found the Irvington-based laboratory violated state regulations by billing for drug tests without obtaining required physician signatures, according to a report released by the Office of the State Comptroller (OSC).
The audit reviewed 183 drug testing episodes from July 1, 2017, through March 31, 2021, and found that Sunrise violated Medicaid regulations in 52 episodes where documentation failed to comply with legal requirements. In 44 of those 52 episodes—24 percent of instances reviewed—Sunrise billed for tests without obtaining required physician signatures to verify medical necessity.
“Enrolling in the Medicaid program comes with clear responsibilities. Laboratories that accept Medicaid payments must follow Medicaid rules,” says acting state comptroller Shirley Emehelu in a release. “The Division of Medical Assistance and Health Services (DMAHS) long ago established regulatory requirements to prevent fraud, waste, and abuse in clinical testing. Sunrise disregarded these requirements, putting taxpayer dollars at risk, and potentially compromising the care of patients undergoing drug treatment.”
Physicians Report Unauthorized Stamp Usage
When auditors interviewed physicians from drug treatment facilities associated with the 44 unsigned test orders, they uncovered concerning practices. One physician revealed that a Sunrise employee affixed the physician’s stamp to test orders, while another stated that a facility employee from a different laboratory—not Sunrise—collected specimens and affixed physician stamps on their behalf.
A third physician told OSC that although he ordered the tests, he was not involved in submitting or processing test orders and instead routinely relied on the facility’s specimen processing team, under the director of nursing’s supervision, to sign the orders. A fourth physician said she had never seen a requisition form from Sunrise and instead relied on a verbal standing order for drug tests.
Failed to Perform Ordered Tests
The audit also identified 44 separate instances in which Sunrise failed to perform tests ordered by doctors—24 percent of episodes reviewed. While OSC is not seeking repayment for these episodes because they did not cause economic harm to the Medicaid program, the agency stressed that Sunrise’s failure to perform ordered tests could have compromised patient care.
Sunrise has participated in New Jersey Medicaid since 2015 and was one of the program’s highest-paid providers during the audit period, according to the report.
OSC has audited six other clinical laboratories participating in the state Medicaid program. Those audits resulted in OSC ordering repayment of a combined $40.5 million from Ammon Analytical Laboratory, Atlantic Diagnostic Labs, Clarity Laboratories, RDx Bioscience, Star Laboratory, and Truetox Laboratories.
OSC made eight recommendations to Sunrise, including directing the laboratory to train staff on Medicaid compliance practices and to submit a corrective action plan.
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