Department of Justice Brings Criminal Charges Against 35 Individuals for Involvement in $2.1 Billion in Fraudulent Genetic Testing Results

The Justice Department, in coordination with HHS-OIG and the FBI recently announced the arrest and prosecution of 35 individuals for a massive genetic testing fraud scheme involving dozens of telemedicine companies and cancer genetic testing laboratories (CGx).

The defendants fraudulently billed Medicare more than $2.1 billion for CGx testing.  Among those charged were 10 medical professionals, including nine doctors.  In addition, CMS took administrative action against cancer genetic testing companies and medical professionals who submitted more than $1.7 billion in false claims to Medicare.

The prosecution was the culmination of a large investigation involving charges against 380 individuals who allegedly billed federal health care programs for more than $3 billion and prescribed approximately 50 million controlled substance pills in various regions of the United States.  These include charges against 105 defendants for opioid-related offenses and charges against 178 medical professionals.

In the most recent action, the federal investigation targeted a scheme involving the payment of illegal kickbacks and bribes by CGx laboratories in exchange for referral Medicare beneficiaries by medical professionals working with fraudulent telemedicine companies for expensive cancer genetic tests that were medically unnecessary. 

In many cases, the test results were not provided to the beneficiairies or were worthless to their actual doctors.  Some of the defendants allegedly controlled a telemarketing network that lured hundreds of thousands of elederly and/or disabled  patients into a criminal scheme that affected victims nationwide.  The defendants paid doctors to prescribe CGx testing, either without any patient interaction or with only a brief telephone conversations with patients they had never met or seen.

In the Southern District of Florida, three defendants were charged, including one owner of a telemedicine company who billed Medicare over $326 million for false CGx tests.  Doctors contracted with the defendant’s company to authorize bogus orders for CGx tests when he doctors had no relationship at all with the patients.  Various laboratories then submitted false claims.

In the Eastern District of Louisiana, a defendant was charged for his role in a scheme to solicit medically unnecessary CGx from Medicare beneficiaries through telemarketing and health fairs.  The test were then approved by telemedicine doctors who did not treat or even speak to the patients.  The owner of the labs involved paid kickbacks to the telemarketers.  Collectively, the labs billed Medicare for more than $547 million in tests.  The government also seized 16 bank accounts and real estate from the defendant.

In the Southern District of Georgia, 19 defendants were charged, including one physician who signed thousands of orders for durable medical equipment for Medicare beneficiaries he claimed to be “treating” but in fact never even met.  The defendant had short telephone conversations with the patients but then signed medical records stating that he performed examinations or physical tests of the patients that were never actually performed.

In the Northern District of Texas, three physicians were charged for their role in ordering CGx tests despite not examining the patients or sometimes not even speaking to the patients.  In most cases, the results of the tests were never even provided to the so-called patients.

In the Middle District of Florida, a marketer was charged for providing Medicare beneficiary information to doctors and telemedicine companies that was then used to bill for medically unnecessary genetic testing.

In the Middle District of Louisiana, two defendants were charged for soliciting medically unnecessary CGx tests, having them approved by telemedicine doctors and the submitting claims through clinical laboratories in exchange for kickbacks paid for the referrals.

In the District of New Jersey, six individuals were charged, including one physician.  One scheme involved a network of laboratories that facilitated genetic testing that partnered with a healthcare company  to acquire DNA sample and Medicare information from hundreds of patients through various methods including offering $75 gift cards to patients, all without the involvement or direction of any physician.  A physician based in Florida served as the ordering physician and authorized genetic testing for hundreds of patients he never saw, examined or treated.

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