Members of Robinson+Cole’s Enforcement, Investigations + Litigation in Health Care team—Edward J. Heath, Seth B. Orkand, and Danielle H. Tangorre—have achieved another significant victory, this time at the U.S. Court of Appeals for the First Circuit, in the case of U.S. ex rel. Omni Healthcare Inc. v. MD Spine Solutions LLC et al.

Earlier this year, the team obtained summary judgment in the District of Massachusetts, successfully defending MD Labs and its owners, Matthew Rutledge and Denis Grizelj, against allegations under the False Claims Act (FCA) related to medical necessity of laboratory testing and the payment of commissions to independent contractor marketers. Judge Patti Saris held that the government or a relator must prove that a violation of the Anti-Kickback Statute (AKS) was the but-for cause of a false claim—a stricter standard than some other courts have adopted.

On appeal, the First Circuit unanimously affirmed the district court’s decision, declining to revive Omni Healthcare’s FCA suit. The appellate panel found that Omni Healthcare failed to present evidence that MD Labs knowingly submitted false claims for urinary tract infection (UTI) testing. Notably, the court recognized that Omni Healthcare’s own staff ordered each test, sometimes even replacing doctors’ orders for less expensive tests with pricier ones, and that Omni’s owner instructed staff to order tests to substantiate FCA claims against MD Labs.

In a published opinion, the First Circuit clarified— as a matter of first impression— that in FCA cases alleging Medicare fraud based on laboratory testing, a laboratory can generally rely on a doctor’s order to show that the test is “reasonable and necessary.” The burden then shifts to the FCA claimant to rebut this showing. The panel warned that accepting Omni Healthcare’s litigation position could lead to dangerous consequences if labs begin to second-guess providers’ orders or delay care to avoid FCA liability.

Seth B. Orkand, counsel for MD Labs, commented: “Our clients are very pleased by the First Circuit’s decisive ruling in their favor. More broadly, this landmark False Claims Act healthcare decision reinforces the evidentiary burden that relators must meet to survive summary judgment and, crucially, clarifies the legal standard for assessing medical necessity in the clinical laboratory context.”

The First Circuit’s decision not only upholds the earlier summary judgment, but also sets an important precedent for clinical laboratories nationwide, confirming that commissions to independent contractors are not per se illegal and that laboratories may rely on the ordering provider’s determination of medical necessity. The ruling further deepens the divide among federal courts regarding the causation standard under the FCA and highlights the evolving landscape of liability for clinical laboratories.

Law360 was the first to cover this case of first impression in their article, “1st Circ. Tosses Omni’s Medicare Fraud Suit Over UTI Tests,” on December 1, 2025. Seth conveyed, “Our clients are very pleased by the First Circuit’s decisive ruling in their favor…” and reinforced its significance explaining that, “More broadly, this landmark False Claims Act healthcare decision reinforces the evidentiary burden that relators must meet to survive summary judgment and, crucially, clarifies the legal standard for assessing medical necessity in the clinical laboratory context.” 

Laboratory Economics covered the First Circuit decision, speaking with Danielle Tangorre for their December 2025 article, “Rules Providing Clarity on Labs’ Reliance on Doctors’ Orders.” Danielle commented that the decision “affirms the unique role of a laboratory and brings greater clarity to the collaborative responsibilities between laboratories and ordering providers concerning medical necessity.” Danielle noted that while the ruling clarifies that labs can generally rely on a doctor’s order to show that the test is “reasonable and necessary,” she counsels that labs continue to have responsibilities to ensure compliance when submitting claims to Medicare and to avoid potential allegations of violations of the FCA.

Massachusetts Lawyers Weekly also reviewed the trajectory of this case leading to the First Circuit decision in their December 22 article, “1st Circuit tosses FCA claim against medical lab.” In the piece, Seth said the decision confirms that a provider’s order of a lab test will create a safe harbor of medical necessity for a lab that a relator must rebut to survive summary judgment as to scienter. “The court appropriately cautioned that adopting our opponent’s position could create harmful consequences — forcing labs to second-guess medical providers or delay care to avoid FCA liability,” Seth said. “Unlike medical providers, labs do not evaluate patients, have knowledge of their medical histories, or have the medical expertise to determine the appropriate diagnostic testing or treatment.”

Robinson+Cole’s Enforcement, Investigations + Litigation in Health Care team’s defense was also supported by Julianna M. Charpentier, Scott T. Garosshen, Kevin P. Daly and Theresa E. Lane.