By Pat Anson, Editor

A bankrupt drug testing lab with a checkered history has been linked to a large money laundering and pill mill operation in Tennessee.

According to an updated indictment in U.S. District Court in Knoxville, Confirmatrix Laboratory in Georgia and Sterling Laboratories in Seattle paid nearly $3 million in illegal kickbacks to have thousands of urine drug test samples sent to them from patients at the Knoxville Hope Clinic (KHC). In return, the labs submitted false claims for "unnecessary" drug tests to Medicare and TennCare, Tennesee’s Medicaid program.

“Confirmatrix, by and through its principals and agents, paid bribes and kickbacks to defendants Clyde Christopher Tipton and Maynard Alvarez in return for causing Medicare and TennCare beneficiaries from KHC to be referred to Confirmatrix for medically unnecessary drug screenings,” the indictment alleges.

“Medical providers at KHC prescribed opioids and other controlled substances to thousands of purported pain patients in exchange for grossly excessive fees. The vast majority of the prescriptions were unreasonable and medically unnecessary. Patients were required to keep follow-up appointments every 28 days to continue receiving their prescriptions. Providers at KHC ordered medically unnecessary Drug Screenings for every patient every 28 days.”

Tipton, Alvarez and six other defendants are accused of drug trafficking and money laundering in the long-running investigation of Tennessee pill mills. The ringleader of the pill mill scheme, a 53-year old grandmother named Sylvia Hofstetter, allegedly made millions of dollars while running clinics that prescribed 12 million opioid prescriptions. Prosecutors have alleged that at least nine patients at the clinics died from drug overdoses.

No one affiliated with Confirmatrix or Sterling Laboratories has been indicted so far in the case. Prosecutors say the   alleged kickbacks were paid from August 2013 to July 2016.

As PNN has reported, Confirmatrix filed for Chapter 11 bankruptcy last November, just two days after its headquarters near Atlanta was raided by FBI agents.  The company was founded by Khalid Satary, a convicted felon and Palestinian national that the federal government has been trying to deport for years.

A 2013 study by the Centers for Medicare and Medicaid Services (CMS) listed Confirmatrix as the most expensive drug lab in the country, collecting an average of $2,406 from Medicare for each patient tested, compared to the national average of $751. The bills from Confirmatrix were high because the company ran an average of nearly 120 different drug screens on each patient, far more than any other drug lab.

These and other abusive billing practices finally caused Medicare to lower its reimbursement rates for drug testing, which led to Confirmatrix’s financial problems.

Although it filed for Chapter 11 bankruptcy nine months ago, Confirmatrix remains in business and continues to bill patients and insurance companies for costly drug screens.

Some current and former patients at the Benefis Pain Management Center, a pain clinic in Great Falls, Montana, have received bills from a collection agency seeking well over $1,000 for drug screens that normally cost a few hundred dollars.

“Confirmatrix is out of network, hence I am stuck with the bill unless Benefis writes it off,” one patient told PNN. “I spoke to my insurance about it and they told me that there are labs in Montana that could have done the same thing and would have been covered by my insurance. She asked me, why they would go to a Georgia lab?”

In a statement to PNN in May, a Benefis official defended the clinic’s continued use of Confirmatrix, saying the company performs a valuable service and “waives many costs.”

“The company we have partnered with has an extensive patient assistance program, which is part of the reason they were selected. That company was selected two years ago because it was one of the few labs nationwide that offered quantitative and qualitative testing AND patient assistant programs,” said Kathy Hill, Chief Operating Officer at Benefis Medical Group.

Confirmatrix’s laboratory, office and warehouse space were recently put up for auction by the bankruptcy court under sealed bid.