Lab Audit Defense

Former Federal Healthcare Fraud Prosecutors and DEA, DOJ, and OIG Agents Experienced in Lab Audit Defense

Lynette Byrd
Attorney Lynette Byrd
Healthcare Fraud Team Lead
Former Federal Prosecutor
Nick Oberheiden
Attorney Nick Oberheiden
Healthcare Fraud Team
Kevin M. Sheridan
Kevin M. Sheridan
Healthcare Fraud Team
Former FBI Special Agent
Wade McFaul
Wade McFaul
Healthcare Fraud Team
Former HHS-OIG Assistant Special Agent-in-Charge

Audits present significant risks for toxicology and clinical labs. These audits can take many forms and involve a variety of entities. When facing a lab audit, understanding the circumstances involved is the first step, then lab owners and executives must work quickly to protect their businesses (and themselves) by all means available.

At Oberheiden P.C., we have significant experience in lab audit defense. We represent toxicology and clinical laboratories in all types of audits, including private insurance audits, DEA audits, and Medicare and Medicaid audits conducted by fee-for-service contractors. With a team comprised of former federal healthcare fraud prosecutors; former DEA, DOJ, and OIG agents; and career healthcare fraud defense attorneys, we offer our clients relevant insights, and our lawyers and consultants rely on their high-level experience to help guide our clients’ audits toward favorable outcomes.

What To Expect During a Lab Audit

When facing a lab audit, knowing what to expect is critical for making informed decisions. As discussed below, prompt intervention is a key part of an effective lab audit defense strategy. If lab owners and executives are not prepared for what is to come, they will be at a significant disadvantage. With our lawyers’ and consultants’ experience, we can advise you immediately, and we can also take action immediately on your lab’s behalf.

Here is an overview of what to expect during a lab audit:

  • Auditors Will Request Voluminous Records – Auditors targeting laboratories will typically seek access to years’ worth of billing records and related documentation. It is important to note, however, that prior to seeking this access auditors may have already reviewed submitted billing records and identified alleged violations.
  • Auditors May Request Records You Aren’t Required to Disclose – When seeking access to labs’ records, auditors will often request access to documents that labs are not required to provide. With this in mind, labs need to be very careful to avoid providing dated records that are no longer subject to review as well as records that fall outside of the authorized scope of the audit.
  • Auditors Will Request to Speak with Lab Personnel – In addition to seeking voluminous records, auditors may also request to speak with lab personnel. Lab owners and executives should make informed decisions about the personnel authorized to communicate with auditors, and they should ensure these personnel have a clear understanding of the information they should and should not provide.
  • When in Doubt, Auditors Will Err On the Side of Fraud – If an audit does not uncover records that substantiate a lab’s billings, auditors will make the assumption that no such documentation exists, and they will default to a finding of fraud. To avoid this outcome, labs need to engage experienced defense counsel to oversee all aspects of the audit process.
  • Flawed Methodologies and Assumptions Will Lead to Flawed Results – It is not unusual for auditors to rely on flawed methodologies and assumptions. Auditors will also frequently attempt to charge labs with violating rules that did not apply at the relevant time. Here too, avoiding unjustified outcomes requires experienced legal representation.
  • If You Aren’t Proactive, You Will Almost Certainly Face Recoupments – When labs fail to engage in the audit process, they almost invariably face recoupment liability. In many cases this recoupment liability is substantial. While there are appeal procedures, appealing the outcome of an audit is a time-consuming process with an uncertain outcome.
  • Avoiding Unjustified Consequences Will Require an Effective Defense – In addition to unjustified recoupment liability, targeted labs can also face unjustified denial of pending claims, pre-payment review, program exclusion, and other consequences. The only way to mitigate this risk effectively is to engage experienced defense counsel who can intervene before flaws in the audit process lead to a flawed result.

Put our highly experienced team on your side

Dr. Nick Oberheiden
Dr. Nick Oberheiden



Lynette S. Byrd
Lynette S. Byrd

Former Assistant U.S. Attorney


Ellen Comley
Ellen Comley

Senior Counsel


Roger Bach
Roger Bach

Former Special Agent (OIG)

Steven Taylor
Steven Taylor

Healthcare Compliance Consultant

Susan Sage
Susan Sage

Healthcare Auditor

7 Keys to Successful Lab Audit Defense

With these considerations in mind, it isn’t hard to see that successfully defending against a lab audit requires a careful, comprehensive, and strategic approach. Some of the keys to a successful lab audit defense include:

1. Prompt Intervention in the Audit Process

Prompt intervention is essential. Intervening in the audit process lets the auditors know that they will not be operating unchecked, and this alone can serve to prevent many issues. When labs engage Oberheiden P.C. for audit defense, our lawyers intervene in our clients’ audits immediately, and we immediately begin our efforts to steer our clients’ audits toward a favorable resolution.

2. Assembly of an Audit Defense Team

To prevent the unnecessary disclosure of records or information (among other issues), labs that are facing audits need to assemble an audit defense team. This team should include internal personnel who are qualified to assist with the lab’s response as well as outside defense lawyers and consultants. With clear roles and clear communication channels, there is far less risk of unnecessary mistakes leading to unnecessary consequences.

3. Examination of All Relevant Records

When facing external audits, it is imperative that labs conduct their own internal audits to determine what (if anything) the external auditors are going to find. We conduct these internal audits for our clients, ensuring that we have all of the information we need to defend our clients effectively.

4. Formulation of a Cohesive Defense Strategy

Once we know what (if anything) the external auditors are going to find, we can then formulate a cohesive defense strategy. We can also anticipate issues that are likely to come up during the audit and prepare to address them promptly when they arise. Depending on the circumstances presented, we can either use our clients’ existing documentation to demonstrate compliance, or we can help our clients address past violations without incurring unnecessary penalties.

5. Consistent Communication with the Auditors

During a lab audit, it is important to keep the pressure on. The auditors need to know that their actions are subject to scrutiny at all times. We stay in communication with the auditors throughout our clients’ audits, and we press any issues that present risks or opportunities for our clients.

6. Prompt Challenges to Any Flawed Methodologies, Assumptions, or Conclusions

When facing audits, lab owners and executives should anticipate that the auditors will make mistakes. This includes relying on flawed methodologies and assumptions, relying on inapplicable rules and regulations, and reaching flawed conclusions. To prevent these flaws from leading to recoupments and other penalties, labs must challenge them promptly during the audit process.

7. Preservation of Issues for Appeal (if Necessary)

Finally, to ensure that they retain every opportunity to protect themselves, labs that are facing audits should preserve issues for appeal. Among other things, this involves thoroughly documenting all aspects of the audit process so that they can prove flaws in the process if necessary. There are several stages of audit appeals; and, if a lab suffers an unfavorable audit determination, there are several possible grounds for challenging this determination in both administrative and judicial proceedings.

FAQs: Lab Audit Defense Tactics, Strategies & Risks

What Should I Do if My Lab is Being Audited?


If your lab is being audited, the first step is to engage experienced defense counsel promptly. You will need your lab’s defense counsel to intervene in the audit and take steps to prevent the auditors from reaching flawed conclusions.

Do I Need to Engage Defense Counsel for a Lab Audit?


Engaging defense counsel for a lab audit is a critical step for ensuring that the consequences of the audit are no greater than necessary. Auditors frequently overreach and make mistakes; and, if your lab does not have defense counsel who can address these issues effectively, your lab could end up facing substantial liability that is not warranted.

What are the Risks Involved in a Lab Audit?


The risks of facing a lab audit include recoupment liability, denial of the lab’s pending reimbursement claims, and pre-payment review of future claims (which can delay payment by months). In severe cases, labs can also face exclusion (i.e., loss of eligibility to bill Medicare), and auditors may also refer the lab to federal authorities for civil or criminal prosecution.

How Can I Avoid Recoupments and Other Penalties in a Lab Audit?


Avoiding recoupments and other penalties during a lab audit requires a proactive and strategic approach. Working with their lab’s defense counsel, lab owners and executives will need to make informed decisions with a clear understanding of the lab’s potential exposure, and they will need to rely on their defense counsel to steer the audit toward a fair and positive result. What this entails in any particular case will depend on the specific facts and circumstances involved.

Schedule a Complimentary Consultation with a Lab Audit Defense Lawyer or Consultant at Oberheiden P.C.

If you need an experienced team for lab audit defense, we encourage you to contact us promptly to arrange a complimentary initial consultation. To speak with a senior lab audit defense lawyer or consultant at Oberheiden P.C. in confidence as soon as possible, call 888-680-1745 or tell us how we can reach you online now.

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