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On the same day that Vice Presidential nominee Paul Ryan was lying to the RNC about the cuts that President Obama made to Medicare, which actually cut fraud and abuse, a company owned by Bain Captial was embroiled in a lawsuit in Tampa involving the company's alleged fraudulent and illegal practices involving Medicare.

The company, Ameritox, is suing one of its competitors, Millennium Laboratories, a company that provides drug testing services for health care professionals. In Millennium's counterclaim, the filing alleges that Ameritox has engaged in unlawful schemes designed to maintain and enlarge its business and increase the value of the firm for the venture capital firms that own and control it at the expense of Millennium and the American public.

From the lawsuit:

Ameritox’s most disturbing conduct involves encouraging health care providers to order testing based on the patient’s insurance coverage, not on the basis of medical necessity, a practice that financially benefits Ameritox but works to the detriment of patients and certain third party payers, most notably including the federal Medicare program. This practice has enriched Ameritox’s owners and investors, including Sterling Partners, Bain Capital Venture Partners, LLC, and Sequoia Capital at the expense of the American people. 

These tactics are nothing new for Ameritox: The company has a long and continuing history of offering illegal kickbacks to physicians for referrals. Ameritox’s improper inducements include, but are not limited to, placing personnel in the offices of Ameritox’s customers in violation of state law prohibitions on such placement; providing free or below- market point-of-care testing cups to generate extra revenue for practitioners who use those cups to perform billable testing; and offering other various inducements and kickbacks to practitioners and their medical practices, including gift cards, meals, computers, and office parties.  Ameritox’s fraudulent and illegal practices are pervasive and undertaken as part of a scheme to increase its revenues at the expense of Millennium, other competitors, patients, and the United States. 

Ameritox is notorious for engaging in fraudulent business practices to gain an unfair competitive advantage. In fact, Ameritox currently is operating under government oversight as a result of a Department of Justice (“DOJ”) investigation, which covered an approximately six-year period of time and charged that Ameritox paid kickbacks to induce health care providers to refer Medicare business to Ameritox. Despite being subject to a five- year Corporate Integrity Agreement with the Office of the Inspector General for the Department of Health and Human Services (“OIG”) and promising to change its ways, Ameritox has continued to engage in unlawful and anti-competitive conduct in Florida, California, Texas, and throughout the country that is designed to harm Millennium. 

Ameritox engages in illegal behavior by changing its testing recommendations to physicians based on insurance coverage. Ameritox’s bottom-line driven strategy includes encouraging health care providers to order tests for patients based on whether their insurance coverage provides lucrative reimbursement instead of based on medical need. Thus, Ameritox pushes frequent testing for patients covered by Medicare or other favorable insurance plans but discourages physicians from testing uninsured patients or patients who do not qualify for reimbursement from third-party payers for such tests. 

The filings allege that Ameritox offers financial incentives that flout anti-kickback and unfair financial inducement laws, and that Ameritox continues practices challenged by the DOJ and disallowed in several states.   

In 2010 a laboratory in Texas agreed to pay $16.3 million for a civil settlement with the DOJ

A Texas laboratory agreed to pay $16.3 million in a civil settlement with the U.S. Department of Justice.

The settlement is a notable achievement in a continuing campaign against health care fraud in the Tampa Bay area, Robert O’Neill, U.S. Attorney for the Middle District of Florida, said in a statement.

The settlement addresses allegations that Ameritox LTD paid kickbacks to providers in order to induce them to refer Medicare business, according to a statement from O’Neill’s office.

The federal government will receive $15.5 million from the settlement. The rest will be split among various states.

The federal share of the settlement will provide a $3.4 million payout to a former Ameritox sales representative, Debra Maul. Maul filed suit in the Middle District of Florida under the qui tam (whistle blower) provisions of federal legislation that allows private citizens with knowledge of fraud against the government to bring a lawsuit on behalf of the United States and to share in any recovery.

Practices by Ameritox also came to the attention of The Agency for Health Care Administration in 2011, which issued an order to Ameritox, saying that it had to stop sending specimen collectors/processors to physicians’ offices immediately. By doing so, wrote Karen Rivera, a laboratory licensure unit supervisor at AHCA, Ameritox was violating the anti-kickback statute of Florida law.

Ameritox also sued a low wage working grandmother when the doctor's office she worked at fired Ameritox because they weren't happy with their work. The office switched to another laboratory. Because they were happy with the work Pamela Rockwell did, they recommended her to the replacement company which hired her.

Saying she violated a non-compete agreement, Ameritox sued her, claiming that she had "trade secrets." Rockwell feared losing her job due to the lawsuit, a job that pays only $11.50 an hour.

Bain Capital continues to make a profit at the expense of the companies it gobbles up, and at the expense of those who work for them. In the case of Pamela Rockwell, they compound the misery by suing them, while putting them out of a job. Yet Mitt Romney campaigns on his experience at "job creation" and attacks those who point out the human costs of the ways he does business.

At the same time Paul Ryan was in Tampa giving misleading information on Medicare cuts that would cut down on fraud and waste, Mitt Romney's former company was benefiting from those very things. The Medicare cuts that Paul Ryan's plan include, the very same as Obama's, would go back to the companies themselves and not to the benefit of patients as Obama's will.

Last night when Mitt Romney made his nomination acceptance speech, he said this:

Paul Ryan and I understand how the economy works, we understand how Washington works, we will reach across the aisle and find good people who like us, want to make sure this company deals with its challenges. We’ll get America on track again.

Calling the country a "company" may have been a mere slip, but old habits die hard. Mitt Romney himself says, after all, that he wants to run the country like a business. If he succeeds, he'll put profits over people and government services. 

That may be good for companies, but not for Americans.


Cross posted at Beach Peanuts

Correction: In 2010 a laboratory in Texas agreed to pay $16.3 million for a civil settlement with the DOJ. The original post mistakenly said 2012. I have corrected the date above.

Originally posted to Beach Peanuts on Fri Aug 31, 2012 at 01:45 PM PDT.

Also republished by The Bain Files.

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