Budget Amendment ID: FY2015-S4-709

EHS 709

Clinical laboratory self-referrals

Mr. Finegold moved that the proposed new text be amended moved that the bill be amended by inserting, after section 71, the following new sections:-

“SECTION XX. Section 1 of chapter 111D of the General Laws, as so appearing, is hereby amended by striking out clause (3) and inserting in place thereof the following clause:-

(3) “Company”, a corporation, partnership, limited liability company, limited liability partnership, an association, a trust or an organized group of persons, whether or not incorporated.

SECTION XX. Said section 1 of said chapter 111D, as so appearing, is hereby further amended by striking out clause (7) and inserting in place thereof the following 2 clauses:-

(6A) “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 or co-ownership in any form.

(7) “Person”, 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.

SECTION XX. Section 8 of said chapter 111D, as so appearing, is hereby amended by adding the following clause:-

(17) knowingly 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, that this clause shall not apply to: (i) 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; (ii) a hospital or clinic licensed under section 51 of chapter 111 used exclusively in connection with the diagnosis or treatment of the hospital's or clinic’s own patients; or (iii) any case exempted under subsection (b) to (d), inclusive, of 42 U.S.C. section 1395nn, or specifically permitted by regulations or rules of the United States Secretary of Health and Human Services, the federal Centers for Medicare or Medicaid Services, the executive office of health and human services or the executive office for administration and finance.

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 knowingly 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. This section shall not apply to: (i) 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; (ii) a hospital or clinic licensed under section 51 of chapter 111 used exclusively in connection with the diagnosis or treatment of the hospital’s or clinic’s own patients; or (iii) any case exempted under subsections (b) to (d), inclusive, of 42 U.S.C. section 1395nn, or specifically permitted by regulations or rules of the United States Secretary of Health and Human Services, the federal Centers for Medicare or Medicaid Services, the executive office of health and human services or the executive office for administration and finance.

SECTION XX. Said chapter 111D is hereby further amended by striking out section 13, as appearing in the 2012 Official Edition, and inserting in place thereof the following 2 sections:-

Section 13. (a) 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 8, 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, 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) If a person or company violates the provisions of clause (17) of section 8 or section 8A, 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 3 times the amount of damages sustained, including consequential damages. A person violating clause (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, but not limited to, 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) A 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 clause (17) of section 8 or 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 3 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 14. Pursuant to the authority of the department under clause (8) of section 2, the department shall require all clinical laboratories to disclose any ownership interests in writing to the department every 2 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. Any person who fails to provide such disclosure shall be subject to a fine not exceeding $5,000 by the department.”