Alerts and Updates

Department of Justice Announces National Enforcement Sweep of Genetic Testing Laboratories and Telemedicine Providers

October 7, 2019

The DOJ’s press release highlights several distinct, but factually similar, criminal cases, each allegedly resulting in millions of dollars of fraudulent billings and losses to Medicare. 

Genetic testing and telemedicine targeting senior citizens and individuals with disabilities have been the subject of growing government scrutiny. Most recently, on September 27, 2019, the United States Department of Justice announced charges against nearly three-dozen individuals—across numerous federal judicial districts—allegedly responsible for more than $2.1 billion in Medicare billing losses, all of which stem from misconduct in the provision of genetic testing and telemedicine services.

According to the DOJ’s press release, the federal investigation uncovered a scheme in which cancer genetic testing laboratories paid kickbacks and bribes to healthcare providers in exchange for the referral of medically unnecessary services for Medicare beneficiaries. The government alleges that, in many instances, the tests were ordered by physicians who had no treating relationship with the patients and the results of the unnecessary tests were often withheld from the beneficiaries or their actual treating physicians. The DOJ also alleges that the defendants targeted seniors and individuals with disabilities. According to the government, the patients often received scripts for genetic testing from physicians with whom they had never interacted or had had only brief telephone conversations.

The DOJ’s press release highlights several distinct, but factually similar, criminal cases, each allegedly resulting in millions of dollars of fraudulent billings and losses to Medicare. In one case, the government charged the owner of a telemedicine company in the Southern District of Florida. The government alleges that the company owner and co-conspirators billed Medicare for more than $326 million worth of false and fraudulent cancer genomic tests. According to the government, the company contracted with several physicians who authored orders for the tests, despite never having treated the Medicare beneficiaries, or, in many cases, even speaking with the beneficiaries for whom they authorized the script. The government also alleges the company received substantial kickbacks from the laboratories that processed the medically unnecessary tests, resulting in the indictments of those laboratories as well.

In a separate scheme, the government charged a company in the District of New Jersey and several individuals associated with the company. It alleges the co-conspirators worked to acquire DNA samples and Medicare information from hundreds of patients, in certain cases by promising $75 gift cards. The company would then have a physician in Florida issue scripts for the genetic testing, despite the physician never having met, seen, examined or treated the patients. Members of the conspiracy allegedly falsified the patients’ personal or family histories of cancer and submitted that information to justify the testing. The government also alleges that company employees entered into a kickback arrangement in which the genetic testing laboratories would pay the company a bribe in exchange for delivering DNA samples and orders for genetic tests. Ultimately, the government claims to have lost $4.6 million as a result of the Florida physician’s misconduct, and that the company illegally obtained approximately $1.8 million through the kickback scheme.

The government also brought charges in the Eastern District of Louisiana against the owner of several labs in Louisiana, Oklahoma and Georgia. The government alleges that the owner and his co-conspirators solicited medically unnecessary cancer genetic testing over the phone and at “health fairs.” The tests were then approved by telemedicine physicians, who had no treating relationship with the patients for whom they prescribed the tests. The lab owner and his co-conspirators then allegedly used corporate entities they controlled to pay kickbacks and bribes to the telemarketers. Ultimately, this scheme purportedly resulted in $547 million in fraudulent billings to Medicare, the seizure of 16 bank accounts and the restraint of the laboratory owner’s real estate holdings.

The DOJ’s release indicates that the charges were the “culmination” of the collaboration of several federal law enforcement agencies, but at least one of the individuals quoted in the DOJ’s release—the United States attorney for the Southern District of Georgia, whose office appears to have filed cases against nearly half of all the individuals involved in the entire sweep—promised that “while these charges might be some of the first, they won’t be the last.” Accordingly, providers and others working at the intersection of telemedicine and genetic testing should be prepared for additional scrutiny by law enforcement, and should consider taking measures to protect themselves by clearly documenting their provider-patient relationships and the medical justifications for any genetic testing ordered.

For Further Information

If you have any questions about this Alert, please contact Daniel R. Walworth, Michael M. Mustokoff, Brett M. Feldman, any of the attorneys in our Healthcare Fraud and Abuse Practice Groupattorneys in our White-Collar Criminal Defense, Corporate Investigations and Regulatory Compliance Practice Groupattorneys in our Healthcare Industry Litigation Practice Group or the attorney in the firm with whom you are regularly in contact.

Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.