Genetic Testing Scams Violate the False Claims Act

In September 2019, the Department of Justice announced that Operation Double Helix had resulted in 35 indictments of individuals associated with telemedicine companies and cancer genetic testing (CGx) and pharmacogenetic testing (PGx) laboratories for their alleged participation in one of the largest health care fraud schemes ever charged. According to the charges, these defendants fraudulently billed Medicare more than $2.1 billion for genetic testing. Multiple indictments were issued here in Georgia, such as against the owners of LabSolutions in Atlanta and Clio Laboratories in Lawrenceville.

The dominoes continue to fall on this genetic testing scheme. Last week, Ravitej Reddy, owner of Pittsburgh-area laboratories Personalized Genetics, LLC, d/b/a Personalized Genomics and Med Health Services Management, pleaded guilty to billing Medicare more than $127 million for CGx and PGx testing, with reimbursements of approximately $60 million, in just one calendar year. As part of his guilty plea, Reddy admitted that he and a group of co-conspirators—comprising of business consultants, marketers, and the operator of a telemedicine entity, among others—acquired thousands of testing samples from Medicare beneficiaries located throughout the United States, as well as the corresponding physician-ordered prescriptions needed to bill Medicare for CGx and PGx testing. The marketers induced beneficiaries to submit CGx and PGx specimens by means of cheek swabs sent to their homes or provided to them at purported “health fairs.” Their pay was based on a percentage of the resulting Medicare reimbursements, which is an illegal kickback to the marketer referring these services to the laboratories.

Genetic testing may be the future of healthcare in our country. PGx can be used to determine how we will respond to different medications, so that the proper meds and dosages can be prescribed with less risk to a patient. CGx can be used to determine whether an individual is genetically predisposed to cancer, so that they can adjust their diets and lifestyles to limit their risk. But these tests are still in their infancy and, with a few exceptions, have yet to be proven effective and/or economically sound. They are appropriate only for extremely specific drugs and conditions. For example, Medicare will generally only reimburse for CGx when a patient has a history of cancer, only when a physician will use the results in the patient’s treatment plan, and only for two particular genetic strands.

However, this fraud scheme is extremely common. Marketers send kits to beneficiaries and tell them Medicare or other insurance will pay the costs. Who doesn’t want a free test to determine if they are at risk of cancer? So the beneficiary swabs their cheek, sends back the kit, and awaits their results. The laboratory falsifies the requisition form and medical necessity documentation, or a telehealth physician calls the beneficiary and asks a few simple questions. However, if insurance does not reimburse the claim, the beneficiary may be in for a shock, such as a bill for over $10,000!

If you are aware of genetic testing fraud, please contact our firm for a free evaluation.