Health Care Enforcement + False Claims Act Litigation team member Danielle Tangorre spoke with The Dark Report and G2 Intelligence about the significance of the U.S. Court of Appeals for the First Circuit  in U.S. ex rel OMNI Healthcare v. MD Spine Solutions LLC, et al that came down in December 2025. The decision affirmed a lower court’s dismissal of a “high stakes” False Claims Act lawsuit, providing clarity for the diagnostic laboratory industry. Danielle, along with team members Edward J. Heath and Seth B. Orkand, represented MD Labs in the appeals case.

Covering the decision from a legal risk perspective, The Dark Report said, “this decision creates a new 'safe harbor' for medical necessity while defining the specific boundaries where that protection ends.” Danielle explained the decision enshrined that “clinical laboratories can generally rely on a physician’s order as evidence that testing is reasonable and necessary…[T]hat’s significant because labs bill for tests but do not treat patients. They rely on the physician’s clinical judgment.” Danielle noted, however, that the relationship is collaborative and labs also have a corollary duty.

Danielle also highlighted how the decision shifted the burden of proof, as the First Circuit Court focused specifically on the intent required for a lab to be held liable for fraud. “The court also clarified that if a lab relies on a physician’s order, the burden shifts to the relator to show the lab should not have relied on it—for example, if the lab influenced or usurped the physician’s decision-making,” said Tangorre. “That’s a major takeaway for laboratories.”

Because Circuit Court rulings are often cited by other courts across the country, the decision provides a defensive blueprint for labs facing similar allegations. The decision “provides clarity on how courts view a lab’s role in certifying medical necessity while relying on physicians,” Danielle said.  “It essentially gives labs guardrails: Labs can rely on physician orders, but here’s where you can run into trouble. Organizations that operate cohesively and not in silos are in the best position to manage risk,” Danielle concluded.

G2 Intelligence’s "Lab Industry Advisor,” another leading publication for the clinical lab industry examined the decision by focusing on compliance elements of the case. The article said a practical takeaway from the case for clinical lab directors involves the design of test requisition forms. “The courts emphasized that MD Labs did not improperly design its requisition. That’s an important lesson. Labs need to ensure requisitions are not steering or influencing test selection,” Danielle warned. “The same applies to marketing. Overpromising test value or implying broader clinical utility than supported can create risk, even if labs can generally rely on physician orders.” While the appellate ruling focused on medical necessity, it allowed the lower court’s findings on independent contractor commissions to stand. The clinical lab industry has long assumed that paying commissions to independent sales agents is “per se” violation of the Anti-Kickback Statue or the Eliminating Kickbacks in Recovery Act. The MD Labs case suggests that context and compliance matter most. “Importantly, the relator did not appeal the independent contractor issue, so the finding that commission payments are not inherently illegal stands,” Danielle pointed out. “That aligns with a growing trend in the courts: Sales commissions are not automatically violations of AKS or EKRA unless there is some additional improper conduct—what I call a ‘plus factor’—such as influencing ordering behavior.” The court was persuaded by the fact that MD Labs had a robust compliance framework, Danielle said. “Independent contractors were treated similarly to employees, and compliance oversight was robust,” she added. “That’s critical.”