Budget Amendment ID: FY2014-S3-684
EHS 684
Clinical laboratory self-referrals
Mr. Finegold moved that the proposed new text be amended by inserting, after section 71, the following new sections:-
“SECTION XX. Chapter 111D of the General Laws, as so appearing, is hereby amended by striking out section 1 and inserting in place thereof the following section:-
Section 1. As used in this chapter, the following words shall, unless the context requires otherwise, have the following meaning:—
(1) “Clinical Laboratory”, a facility or place, however named, the purpose of which is to make biological, serological, chemical, immuno-hematological, cytological, pathological, or other examinations of materials derived from a human body.
(2) “Commissioner”, the commissioner of public health.
(3) “Company”, a corporation, a partnership, a limited liability company, a limited liability partnership, an association, a trust, or an organized group of persons, whether incorporated or not.
(4) “Complex laboratory test” or “Highly complex laboratory test” tests which require sophisticated technique, interpretation of multiple signals or proven technical skill. Such tests shall require, but not be limited to, one or more of the following steps:--(a) highly skilled physical manipulation; (b) technique dependent steps in the testing, sampling or reading of results; (c) user programming of the device or devices; (d) detailed calculation of the results; (e) dilution of samples with chemically reactive substances; or (f) preparation of reagents.
(5) “Department”, the department of public health in the executive office of human services.
(6) “Exempt test”, a test which is generally noninstrumental in nature, and the results of which are determined by observation of a visual signal.
(7) “Ownership interest”, interests including, but not limited to, any membership, proprietary interest, shares of stock in a corporation, units or other interest in a partnership, bonds, debentures, notes or other equity interest or debt instrument , co-ownership in any form or any profit sharing arrangement, or any compensation arrangement.
(8) “Person” and “whoever” shall include corporations, societies, associations, partnerships, limited liability companies, limited liability partnerships, trusts, organized group of persons, whether incorporated or not, an individual or his estate upon his death, any other entity including but not limited to, medical practice, medical office, clinic, counseling center, substance abuse treatment program or sober house, or a political subdivision of the commonwealth, but not an agency of the commonwealth.
(9) “Simple laboratory test”, “waived laboratory test”, “moderately complex laboratory test” tests which may require a series of steps, reagent additions or instrumentation, and the results of which are generally determined by a visual signal, but which are not complex or highly complex laboratory tests as defined in clause (4).
SECTION XX. Section 8 of said chapter 111D, as so appearing, is hereby amended by inserting the following subsection:-
(17) Solicit, accept or test any specimen derived from the human body that is received from, ordered, requested, or referred by: (a) any person or company in which the clinical laboratory, or its directors, owners, partners, employees or family members thereof, have any direct or indirect ownership interest; or (b) any person or company, or its directors, owners, partners, employees or family members thereof, having any direct or indirect ownership interest in the clinical laboratory; provided, however, this subsection shall not apply to a clinical laboratory owned by a licensed physician, or group of licensed physicians, used exclusively in connection with the diagnosis and treatment of said physician's or said group of physicians’ own patients, and where all testing is performed by or under the direct supervision of said physician or said physicians; provided, further this subsection shall not apply to a hospital or clinic licensed under section 51 of chapter 111 used exclusively in connection with the diagnosis and treatment of the hospital’s or clinic’s own patients; provided further, this subsection shall not to apply to any case exempted under 42 U.S.C. section 1395nn(b)–(d) or by regulations, rules, or waivers promulgated by the United States Secretary of Health and Human Services.
SECTION XX. Said chapter 111D is hereby further amended by inserting after section 8 the following section:-
Section 8A. It shall be a violation of this section for any person or company to refer, request, order or send any specimen derived from the human body for examination to a clinical laboratory in which the person or company, or any of its owners, directors, partners, employees or family members thereof have a direct or indirect ownership interest; provided, however, this section shall not apply to a clinical laboratory owned by a licensed physician, or group of licensed physicians, and used exclusively in connection with the diagnosis and treatment of said physician's or said group of physicians’ own patients, and where all testing is performed by or under the direct supervision of said physician or said physicians; provided, further this subsection shall not apply to a hospital or clinic licensed under section 51 of chapter 111 used exclusively in connection with the diagnosis and treatment of the hospital’s or clinic’s own patients; provided further, this subsection shall not to apply to any case exempted under 42 U.S.C. section 1395nn(b)–(d) or by regulations, rules, or waivers promulgated by the United States Secretary of Health and Human Services.
SECTION XX. Said chapter 111D, as so appearing, is hereby further amended by striking section 13 and inserting in place thereof the following section:-
Section 13. (a) Criminal Violations. Whoever maintains a clinical laboratory in the commonwealth without a license in violation of section 4 or whoever, being licensed under section 5 maintains a clinical laboratory in violation of the terms of such license, or whoever engages in, aids, abets, causes or permits any act prohibited under section eight, or whoever refers, requests, orders, or sends any specimen derived from the human body in violation of section 8A shall be punished by imprisonment for not more than 5 years in state prison, or by imprisonment in a jail or house of correction for not more than 2 and 1/2 years or by a fine of not more than $10,000 dollars, or by both such fine and imprisonment. The commissioner shall transmit to the attorney general such evidence of an offense as the department may have in its possession.
(b) Civil Actions. If any person or company violates the provisions of subsection (17) of section 8 or section 8A of this chapter, the attorney general may bring a civil action, either in lieu of or in addition to a criminal prosecution, and may recover a civil penalty of not less than $5,000 and not more than $10,000 per violation, plus three times the amount of damages sustained, including consequential damages. A person violating subsection (17) of section 8 or section 8A shall also be liable to the commonwealth for the expenses of the civil action brought to recover any such penalty or damages, including without limitation reasonable attorney’s fees, reasonable expert’s fees and the costs of investigation. No action shall be brought under this section more than 6 years after it accrues. The commissioner shall transmit to the attorney general such evidence of an offense as the department may have in its possession.
(c) Referral Arrangements or Schemes. Any person or company that solicits, offers or enters into a referral arrangement or scheme with a clinical laboratory which the person or company knows or should know has a principal purpose of assuring referrals by the person or company to a particular clinical laboratory which, if the person or company directly made referrals to such clinical laboratory, would be in violation of subsection (17) of section 8 or in violation of section 8A, shall be liable to the commonwealth for a civil penalty of not more than $100,000 for each referral arrangement or scheme plus three times the amount of damages sustained, including consequential damages. No action shall be brought under this section more than 6 years after it accrues. The commissioner shall transmit to the attorney general such evidence of an offense as the department may have in its possession.
SECTION XX. Said chapter 111D is hereby further amended by inserting after section 13 the following section:-
Section 14. Pursuant to the authority of the department under subsection (8) of section 2, the department shall require all clinical laboratories to disclose all ownership interests in writing to the department every two years. Such disclosure shall contain the name and ownership interest of the disclosing person or company, as well as the names and all ownership interests of all other parties with an ownership interest in the clinical laboratory. A copy of said disclosure shall be provided by the clinical laboratory to the attorney general. Failure to provide said disclosure may result in a fine of up to $5,000.”