A West Bloomfield laboratory will pay nearly $6.5 million to resolve federal allegations that Medicare was billed for over-the-counter COVID-19 tests that beneficiaries never received.
Orchard Laboratories Corporation agreed to pay $6,494,290 in a settlement reached through a coordinated investigation involving the U.S. Attorney’s Office for the Eastern District of Michigan, the FBI and the U.S. Department of Health and Human Services Office of Inspector General, according to The Oakland Press. U.S. Attorney Jerome F. Gorgon Jr. said the False Claims Act remains an important tool for addressing alleged medical billing fraud.
Medicare’s Temporary COVID Test Program
The allegations involve a Medicare program that allowed eligible beneficiaries to receive up to eight at-home COVID-19 tests each month from participating providers. The program ran from April 4, 2022, through May 11, 2023, and paid providers a fixed rate of up to $12 per test, according to the Centers for Medicare and Medicaid Services.
CMS ended the over-the-counter testing demonstration after May 11, 2023, though Medicare Part B continues to cover medically necessary laboratory-conducted COVID-19 tests. The federal agency’s guidance says providers could bill only for tests that eligible beneficiaries requested and received.
Orchard Had Michigan COVID Testing Contract
Orchard’s pandemic-era work also included a statewide Michigan contract for COVID-19 testing kits, testing services and diagnostic services. A contract document from the Michigan Department of Technology, Management and Budget identifies Orchard Laboratories Corp. as the contractor and lists its West Bloomfield operation.
The contract was initially effective May 25, 2022, and was set to run through May 24, 2025, with options for extensions. The state record does not establish any connection between that contract and the federal allegations resolved in Wednesday’s settlement.
Settlement Arrives During Broader Fraud Crackdown
The agreement comes as federal officials are stepping up health care fraud enforcement nationwide. In June, the U.S. Department of Justice said a national operation resulted in charges against 455 defendants tied to more than $6.5 billion in intended fraudulent claims, along with hundreds of provider suspensions and billing-privilege revocations.
Federal officials said the Orchard resolution resulted from cooperation among prosecutors, investigators and health care program watchdogs. The settlement resolves allegations rather than representing a criminal conviction, and the government’s claims against the company were not described as findings reached after a trial.
