UnitedHealthcare accuses Texas labs of $44M fraud scheme

UnitedHealthcare is the latest insurer to allege Sun Clinical Laboratory and Mission Toxicology engaged in
a multimillion-dollar fraud scheme. (jetcityimage/Getty)

UnitedHealthcare is suing the owners of two lab companies for a fraud scheme that the insurer calls “greed personified.”

The lawsuit is is the latest in a string of legal complaints against Sun Clinical Laboratory and Mission Toxicology, two Texas-based clinical laboratories that have been sued by several other insurers, including Aetna and Blue Cross Blue Shield of Mississippi.

In a complaint filed in a Western Texas district court, UnitedHealthcare alleges Sun Clinical owner Michael Murphy, M.D., was the architect of an elaborate fraud scheme in which UnitedHealthcare was “conned” into paying $44 million in improper lab claims over the course of less than two years. 


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According to the complaint (PDF), Murphy, along with Mission Toxicology owner Jesse Saucedo, Jr., paid kickbacks to hospitals to refer United members to their labs. The pair also allegedly set up lab programs at rural hospitals, which they used to submit claims to the insurer as an in-network provider, “charging up to fifty times the actual cost” of the lab tests.

The lawsuit notes that Mission Toxicology "generally operates with indiscernible distinctions" from Sun Clinical Laboratory. 

“The scheme has defrauded United and is detrimental to the American health care system because it offers no benefit to patients, health care markets, or society at-large,” the lawsuit states. “Instead, Defendants’ multi-million dollar heist threatens patients’ health care and destabilizes rural hospitals’ ability to provide care to their communities.”

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Last year, Blue Cross Blue Shield of Mississippi brought similar claims against the labs and a rural hospital, alleging the group engaged in a $33 million fraud scheme. Aetna filled a similar complaint claiming the labs conspired with an Oklahoma hospital to submit $21 million in fraudulent claims. Last month, a Pennsylvania allowed (PDF) Aetna's case to move forward, but transferred it to the same Western Texas district court where UnitedHealthcare filed its complaint. 

UnitedHealthcare’s lawsuit notes that some of the hospitals the lab owners used to launder reimbursement caught on to the scheme and disavowed involvement. Oklahoma-based New Memorial Hospital, sued the labs and an unnamed rural hospital was forced into bankruptcy because of the scheme, according to the complaint.

Sun Clinical and Mission Toxicology did not immediately respond to a request for comment.

Laboratory fraud has long been a concern for federal investigators amid a slew of cases involving blood testing facilities and urine analysis. In 2014, the Office of Inspector General issued a special fraud alert (PDF) warning physicians and physician groups about accepting compensation from labs for blood specimen collection.

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