Sunrise Clinical Lab Billed Medicaid Without Required Signatures in Nearly a Quarter of the Instances Reviewed, OSC Audit Finds

TRENTON-Sunrise Clinical Lab, LLC, an independent clinical laboratory based in Irvington, violated New Jersey Medicaid regulations by billing for drug tests without obtaining required physician signatures-doing so in 24 percent of the instances reviewed-according to an audit report released today by the Office of the State Comptroller (OSC). The audit also found that Sunrise failed to perform tests ordered by doctors in 44 separate instances (24 percent), potentially compromising patient care. Sunrise must repay New Jersey Medicaid $3,437,006.

OSC reviewed 183 drug testing episodes from July 1, 2017 through March 31, 2021 and found that Sunrise violated Medicaid regulations in 52 episodes in which documentation failed to comply with legal requirements. In 44 of 52 episodes, Sunrise billed for the 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," said Acting State Comptroller Shirley Emehelu. "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."

When auditors interviewed the doctors from the drug treatment facilities associated with the 44 unsigned test orders, one revealed that a Sunrise employee affixed the physician's stamp to test orders, while another stated that its facility had an employee of a different laboratory-not Sunrise-collect specimens and likewise affix physician stamps on their behalf. A third doctor told OSC that although he ordered the tests, he was not involved at all in submitting or processing test orders; instead, he routinely relied on the facility's specimen processing team, under the Director of Nursing's supervision, to sign the orders. A fourth said she had never seen a requisition form from Sunrise, and instead relied on a verbal standing order for drug tests.

In addition to the 44 unsigned test orders, OSC auditors found a distinct set of 44 instances in which Sunrise did not perform at least one drug test ordered by a doctor. Though not seeking repayment for these episodes because they did not cause economic harm to the Medicaid program, OSC stressed in its report that Sunrise's failure to perform ordered tests could have compromised patient care.

Participating in New Jersey Medicaid since 2015, Sunrise was one of the program's highest-paid providers during the audit period. 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 (close-out with no recovery), RDx Bioscience, Star Laboratory, and Truetox Laboratories.

OSC made eight recommendations to Sunrise, including directing Sunrise to train staff on Medicaid compliance practices and to submit a Corrective Action Plan, which the laboratory omitted in its response to OSC's audit.

Read the report.

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To report government fraud, waste, mismanagement, or corruption, file a complaint with OSC or call 1-855-OSC-TIPS.