Government Cracking Down on Genetic Testing Labs

A blue door with two small holes in it.

As the use of genetic testing has grown in popularity, so too have the number of investigations into allegations that these labs may be paying kickbacks to physicians for ordering unnecessary tests.

Most recently, two testing labs, Proove Biosciences in Irvine, Calif. and Dallas-based Next Health LLC, have been under investigation for doing just that.

Proove Biosciences is now under receivership, according to an article in STAT, which has published a series of investigative articles on the company and its questionable practices.

In June, Proove Biosciences became the target of a raid by the FBI and Department of Health and Human Services. It’s alleged that Proove representatives, working in private doctors’ offices, coerced patients into taking unneeded tests for sensitivity to opioids or opioid abuse. Proove was charging an average of $300 per test, according to published reports.

In January, UnitedHealthcare filed a lawsuit against Next Health and several of its subsidiaries alleging the laboratory network paid millions of dollars in bribes and kickbacks to doctors and other providers between 2011 and 2016 for unnecessary drug and genetic tests.

UnitedHealthcare, which launched its own investigation, alleged Next Health funneled kickbacks or bribes to providers in multiple geographic areas for drug and pharmaco-genetic test orders. UnitedHealthcare estimated it paid out more than $11 million in claims.

In August, Next Health and one of its subsidiaries, Medicus Laboratories, filed a lawsuit against state and federal agencies seeking a temporary restraining order and injunction to stop them from suspending or revoking its federal laboratory licenses.

Although these two companies are the most recent to find themselves in trouble with regulators, they certainly are not the first and likely won’t be the last. In April 2015, Cardiovascular testing disease laboratories Health Diagnostics Laboratory Inc. (HDL), of Richmond, Va., and Singulex Inc., of Alameda, Calif., agreed to resolve allegations that they violated the False Claims Act by paying remuneration to physicians in exchange for patient referrals and billing federal healthcare programs for medically unnecessary testing.

It was alleged they induced physicians to refer patients to them for blood tests by paying them processing and handling fees of between $10 and $17 per referral and by routinely waiving patient co-pays and deductibles.

In January 2016, Genetic testing company Pathway Genomics Corp. agreed to pay $4.1 million to the federal government, 28 states and Washington, D.C., to settle a former employee’s False Claims Act suit accusing it of running a kickback scheme. Pathway was conducting genetic testing for conditions including somatic and hereditary cancers, carrier screening, cardiac health and diet and weight loss and drug response for medications.

Testing labs, physicians and other healthcare providers would be well advised to make sure any relationships they have comply with anti-kickback laws. 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.

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The Health Law Offices of Anthony C. Vitale