Genetic Testing Scam Costs Florida Businessman $27M and 10 Years in Prison After Pleading Guilty to Healthcare Fraud Charges

A Florida businessman has agreed to pay more than $27 million to resolve allegations he and his companies violated the False Claims Act (FCA) by submitting false claims to and receiving payments from, Medicare for cancer genomic (CGx) tests that were not medically necessary and were obtained through illegal kickbacks.

Daniel Hurt of Fort Lauderdale owned and/or operated Fountain Health Services LLC, Verify Health, Landmark Diagnostics LLC, First Choice Laboratory LLC and Sonoran Desert Pathology Associates LLC.

In addition to restitution for his role in this genetic scam, Hurt was sentenced to 10 years in prison last month, followed by three years of supervised release..

The Genetic Testing Scam

In this genetic testing scam, it was alleged from January 2019 to November 2021, Hurt conspired with telemarketing agents to solicit Medicare beneficiaries for “free” CGx tests; with telemedicine providers to “prescribe” CGx tests that were not medically necessary; with reference laboratories to conduct the CGx tests; and with billing laboratories and a hospital to submit claims for payment.

CGx testing uses DNA sequencing to detect gene mutations that could indicate a higher risk of developing certain types of cancers. It is not used to diagnose cancer.

Medicare Patients Targeted

Hurt admitted that he and his co-conspirators, including those associated with marketing companies, obtained thousands of testing samples from Medicare patients throughout the United States. Marketers used targeted campaigns to get these beneficiaries to submit specimens using cheek swabs that were sent to their homes or provided to them at health fairs.

The specimens were then sent to Ellwood City Medical Center (ECMC) in Pennsylvania, which billed Medicare, even though it did not have proper testing facilities. Instead, at Hurt’s direction, hospital staff re-packaged the samples and sent them to third-party laboratories that could conduct the testing. ECMC closed in January 2020 after struggling financially.

Genetic Tests Not Medically Necessary

To justify Medicare reimbursement for the CGx testing, Hurt and his co-conspirators obtained prescriptions from telemedicine physicians who did not conduct proper telemedicine visits, were not treating the Medicare patients for cancer or symptoms of cancer, and did not use the test results to treat them.

Hurt admitted that the Medicare claims for CGx testing was more than $12,000 per patient. Between January 2019 and October 2019, Medicare reimbursed more than $25 million for CGx testing in this genetic testing scam.

Hurt admitted using the money he obtained from the hospital to pay millions of dollars

in kickbacks to the marketers, among others, in exchange for their efforts to obtain CGx samples. Hurt entered sham contracts with the marketers to disguise the kickbacks to make it look like they were being paid for legitimate marketing and referral services.

Hurt Pleads Guilty to Healthcare Fraud Charges

In September 2022, Hurt pleaded guilty to three counts of conspiracy to commit healthcare fraud, pay and receive unlawful kickbacks, and commit money laundering. At that time, he agreed to pay restitution of $97 million and forfeit more than $30 million and a luxury boat he named “In My DNA”.

According to the settlement agreement, Hurt owned two properties, a plane, a couple of cars, including a Porsche Taycan, and several expensive watches, all of which had to be sold off to pay the settlement, which was based on his ability to pay.

Whistleblower Involved

The settlement includes the resolution of allegations brought in three cases filed under the qui tam or whistleblower provisions of the FCA, including an action filed by Robert Gerstein, a minority owner of Sonoran Desert Pathology, where he worked for Hurt, running the billing operations for CGx tests.

Under the FCA, private parties can file an action on behalf of the United States and receive a portion of any recovery. Under today’s resolution, Gerstein will receive up to $4.7 million or 17 percent of the government’s recovery.

As early as 2019, the U.S. Department of Health and Human Services Office of Inspector General (HHS OIG) was sending out alerts about genetic testing scams.

In 2022, the U.S. Department of Health and Human Services Office of Inspector General found that between 2016 and 2019, Medicare payments for genetic tests quadrupled from $351 million to $1.41 billion, an increase of 302 percent.

Medicare pays an average of $6,000 to $9,000 for these tests, and sometimes as much as $25,000, according to the Office of Inspector General at the Department of Health and Human Services.

How We Can Assist

The Health Law Offices of Anthony C. Vitale can provide you with compliance oversight services, assuring that your business relationships are compliant with all federal and state fraud, waste and abuse laws. We also represent healthcare professionals in state and federal court who are charged with fraudulent billing, kickbacks, Medicare and Medicaid fraud, and false claims.

The Health Law Offices of Anthony C. Vitale, also can provide the support and guidance you need to protect your practice, your reputation, and maintain your professional integrity.

Call us at 305-358-4500 to schedule a consultation and discover how we can assist you in navigating the complexities of healthcare compliance and defense.

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