The doctor suspended from practicing medicine after state regulators accused him of failing to properly monitor use of powerful opiates at Seattle Pain Centers — possibly contributing to several deaths — will now pay $2.85 million to the state and federal governments for billing Medicaid and Medicare for urine tests patients allegedly did not need, according to a new settlement agreement.

The settlement, reached outside of court, resolves an issue that prompted a wider investigation of the pain treatment center and its sole owner, Dr. Frank Li.

Li did not admit to any wrongdoing as part of the settlement with state and federal authorities to be announced Thursday.

Concerns over the urine tests led state officials to examine the opioid-prescribing practices at Seattle Pain Centers and deaths of more than a dozen patients.

You start on this one seemingly narrow area, on the urine drug tests, and it goes into literally a pill mill, opioids and people dying,” state Attorney General Bob Ferguson said in an interview Wednesday. “The scope of the harm Dr. Li caused was extensive.” 

The state investigation shuttered Seattle Pain Centers clinics in 2016. The Washington Medical Commission later suspended Li’s license to practice as a physician, alleging improper oversight.

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The abrupt closure of the clinics, which served thousands of people, left patients in pain and flooding into emergency rooms as other clinics scrambled to absorb their needs.

The allegations against Li also became part of Ferguson’s lawsuit against Purdue Pharma, the pharmaceutical giant that heavily marketed opioids.

In court filings, the state’s attorneys have argued Purdue Pharma encouraged Li to prescribe more opioids to reap profits, despite seeing what the state described as warning signs of abuse. That litigation is ongoing, but on hold, because of the company’s bankruptcy, Ferguson said.

The state Attorney General’s Office began to look into Seattle Pain Centers’ urine testing in 2015.

In the settlement agreement, government investigators said Seattle Pain Centers policies led to “thousands of medically unnecessary” claims to Medicaid and Medicare by requiring all patients to take full urine testing panels from July 2013 through the end of 2015.

Additionally, state and federal prosecutors say Seattle Pain Centers directed the urine testing analysis to Northwest Analytics, a laboratory company owned by Li, to “capture the cash flow” of lab work, the settlement says.

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For the first 10 months of that time period, Northwest Analytics was not accredited or licensed for urine testing, according to the government’s allegations in the settlement.

Mike McKay, an attorney for Li, said Wednesday the doctor believed testing was necessary.

Li and others who treated chronic pain patients, “needed to screen them for inappropriate drug use on a regular basis,” McKay said in a statement. “The government raised concerns about the necessity of tests for each patient, but what the government neglected to account for was that the patient population Dr. Li saw was high-risk and frequent drug screens were medically necessary.”

McKay added that the government’s case had problems, but Li chose to settle “without having to admit liability” because of the time and costs associated with potential litigation and to focus on “more constructive endeavors.”

Li will pay more than $1.1 million to Washington state’s Medicaid program. The rest will go to Medicare and other federal health care programs.

Concerns over Seattle Pain Centers opioid prescribing practices cost Li his business, and at least temporarily, his license to practice in two states.

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In 2018, Li reached an agreement with the Washington Medical Commission to stop practicing medicine for a year. He also agreed to future limitations on his license, including only being able to prescribe controlled substances when patients are in acute pain and only up to a seven days’ supply.

While Li did not admit to wrongdoing in 2018, that agreement lists 16 patients in which acute drug intoxication was listed as a cause or contributor in their deaths and says the patients’ medical records “reveal a pattern of substandard medical care.”

Li said in a statement Wednesday that Seattle Pain Centers had taken on a “mission” during the opioid epidemic to evaluate difficult cases, saying poor patients had an especially hard time finding specialty pain care or were prescribed high doses by family doctors.

“Although we significantly reduced the adverse events associated with chronic opioid therapy in this legacy population, I am humbled by our failure to eliminate all risk,” Li wrote in an email, adding there were lessons to be learned from the approach. “I look forward to making our experience available for critical examination so that better outcomes can be achieved without abandoning patient care.”

After Seattle Pain Centers closed, Li, who was licensed in California, hoped to practice internal medicine there without prescribing opioids,  according to documents from his case with the California Medical Board.

In proceedings, he told a panel of the California Medical Board that he disagreed with the findings of the Washington commission, but “hindsight was 20/20” and he could have “improved his care of patients,” the records say. He reported struggling with denial and depression after his suspension, but he gained stability through his church, family and also by getting a dog.

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In summer 2018, an administrative law judge affirmed the revocation of Li’s physician certificate, calling Li’s actions in Washington “particularly egregious,” noting he had not presented the board evidence he was engaging in “rehabilitation efforts” and did not provide California patient records for the board’s review.

Li could have applied for reinstatement of his license in Washington as early as July 2019 and after completing required ethics courses, according to his agreement in Washington.

Stephanie Mason, a spokeswoman for the Washington Medical Commission, said Li had not completed the initial course nor applied for reinstatement.