Attorney General Ford Announces MD Labs and its Co-Founders to Pay Up to $16 Million to Settle Allegations of Unnecessary Urine Drug Testing

March 31, 2022


Nevada to Receive Up to $335,000

Carson City, NV Today, Nevada Attorney General Aaron D. Ford announced that Nevada has joined with other states and the federal government to settle allegations of Medicaid fraud involving MD Spine Solutions LLC, d/b/a MD Labs Inc. and its principal owners Denis Grizelj and Matthew Rutledge. MD Labs, a California corporation headquartered in Reno, operates a clinical laboratory specializing in urine drug testing.

The settlement, which is based on MD Labs’ financial circumstances over time, is guaranteed at a minimum of $11.6 million and could reach a maximum of $16 million. Of this amount, Nevada could receive over $335,000.  

“This settlement is yet another example of how my office will not allow bad actors to game the Medicaid system for personal gain,” said AG Ford. “I’m proud of the work our Medicaid Fraud Control Unit put in on this settlement, and I hope this serves as an example to bad actors going forward.”

The settlement resolves allegations that from Jan. 1, 2015, through Dec. 31, 2019, MD Labs improperly billed, or caused to be billed, federal health care programs for unnecessary urine drug testing. This included both presumptive tests, a less expensive test that quickly provides qualitative results, and confirmatory tests, a more expensive test that is designed to confirm quantitatively the results of presumptive tests.

MD Labs performed both tests at or around the same time and then simultaneously reported the results to health care providers. MD Labs, Grizelj and Rutledge knew that this rendered the presumptive test results irrelevant for most health care providers. The government alleges that MD Lab’s conduct violated the Federal False Claims Act and the Nevada False Claims Act and resulted in the submission of false claims to the Nevada Medicaid program.

This settlement results from a whistleblower lawsuit originally filed in the United States District Court for the District of Massachusetts. Although the matter was filed in Massachusetts, the company in question, MD Labs Inc., is headquartered in Reno, Nevada. 

A team from the National Association of Medicaid Fraud Control Units (NAMFCU) participated in the settlement negotiations on behalf of the states and included representatives from the Offices of the Attorneys General for the states of Georgia, Massachusetts, Nevada, New Mexico, Texas and Virginia.

The Nevada MFCU receives 75% of its funding from the U.S. Department of Health and Human Services under a grant award. The remaining 25% is funded by the State of Nevada. Persons convicted of Medicaid fraud may also be administratively excluded from future Medicaid and Medicare participation. Anyone wishing to report suspicions regarding any of these concerns may contact the MFCU at 702-486-3420 or 775-684-1100.

NAMFCU regularly assigns national teams to work on large, multi-state whistleblower lawsuits under the False Claims Act (FCA).  In this lawsuit, NAMFCU handpicked Nevada Senior Deputy Attorney General Amy Steelman was handpicked by NAMFCU to serve as team leader. This marked Steelman’s first time as a team leader on a NAMFCU-assigned case. Steelman’s coordination among all the states in putting together this settlement was a large part in obtaining this successful settlement on behalf of Nevada and the other states that participated in the settlement.