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Genetic testing company accused of Medicare fraud settles for $42.6 million

UTC Laboratories was charged with billing Medicaid for unnecessary pharmacogenetic testing.

Jeff Lagasse, Associate Editor

UTC Laboratories, a genetic testing company based in New Orleans that also goes by the name of RenRX, has agreed to pay $42.6 million to settle accusations of Medicare fraud, according to the U.S. Department of Justice.

The company was charged with paying kickbacks in exchange for unnecessary pharmacogenetic testing, which was then billed to Medicare. The DOJ said UTC Laboratories has not admitted liability.

The laboratory will pay $41.6 million of the settlement. The remaining $1 million will be paid by its three principals, Barry Griffith, Tarun Jolly MD and Patrick Ridgeway. On top of the monetary settlement, UTC also agreed to a 25-year ban from participating in any federal healthcare program.

WHAT'S THE IMPACT

The government alleged that between 2013 and 2017, UTC and its principals paid physicians to order pharmacogenetic tests, supposedly in return for their participation in a clinical trial known as the Diagnosing Adverse Drug Reactions Registry. The government also alleged that UTC offered and paid remuneration, including sales commissions, to entities and individuals as part of the scheme, and billed Medicare for the unnecessary tests.

The settlement resolves allegations in six lawsuits pending in the U.S. District Court for the Eastern District of Louisiana.The lawsuits were filed under the qui tam, or whistleblower, provisions of the False Claims Act, which permits private individuals to sue on behalf of the government for false claims and to share in any recovery.

The law also allows the government to intervene and take over the action, as it did in these cases. The whistleblower shares to be awarded have not yet been determined.

The investigation was conducted by the U.S. Attorney's Office for the Eastern District of Louisiana and the DOJ's Civil Division, in conjunction with the Health and Human Services Office of the Inspector General and the FBI.

THE LARGER TREND

The alleged fraud is the second such instance during the past few weeks in which laboratories focused on genetic testing were accused of bilking Medicare.

In late September, the DOJ charged 35 people with unlawfully charging Medicare $2.1 billion in what it said was one of the largest healthcare fraud schemes in history. The alleged offenders in that case were charged in five separate federal districts, and were linked to dozens of telemedicine firms and laboratories focused on genetic testing for cancer. The people charged, including nine doctors and one other medical professional, cumulatively billed Medicare billions for cancer genetic tests, the DOJ said.

ON THE RECORD

"The payment of cash and thinly-disguised referral bribes, as contended by the government, resulted in a more than $42 million dollar resolution in this case," said Special Agent in Charge CJ Porter of the Department of HHS-OIG. "Additionally, my agency barred RenRX from receiving any payments from federal health programs for a full 25 years. Genetic testing scams are becoming all too common. OIG has a genetic testing fraud alert here."

Twitter: @JELagasse

Email the writer: jeff.lagasse@himssmedia.com