Genetic Testing Laboratory Settles Federal Civil False Claims Act Lawsuit Alleging Kickbacks for $2.5 Million

A blue door with two small holes in it.

On January 11, 2021, the U.S. Attorney’s Office for the Western District of Wisconsin announced a $2.5 million dollar settlement with AutoGenomics, Inc., based on kickback allegations.

In short, the lawsuit alleged that the lab, AutoGenomics, paid a marketing company kickbacks for each Medicare claim that the marketing company generated for the lab and was subsequently paid by Medicare. Due to the payment of these kickbacks, any subsequent Medicare claim filed as a result are considered false, which is why AutoGenomics also faced liability under the False Claims Act.

Based on the DOJ’s press release, the big red flag was that the lab allegedly paid the marketing company based on the volume or number of Medicare claims that the marketing company generated. This type of compensation arrangement is clearly prohibited by federal law and may expose a healthcare provider to civil and criminal liability.

However, even if a healthcare provider does not pay a marketing company based on the volume or value of the referral, the provider should still be cautious. Depending on other circumstances, the federal government may still view the arrangement as a kickback scheme.

Healthcare providers should engage a healthcare regulatory/compliance attorney to review proposed or existing marketing arrangements the provider is engaged in. Even if the provider has received assurances from the marketing company, a review by an attorney is highly recommended because, at the end of the day, the provider faces liability for any claim submitted to Medicare. (In submitting the claim, the provider certifies that it complied with all relevant Medicare rules and regulations, which includes the Federal Anti-Kickback Statute.)

The Health Law Offices of Anthony C. Vitale has experience in reviewing marketing arrangements for all provider types. Please contact us for a free consultation at  305-358-4500 or email

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Wesley Malkin