Action Against Individuals Regarding Fraudulent Genetic Testing

Michael Manganelli

Associate Editor

Loyola University Chicago School of Law, JD 2021

In October 2019, The Department of Justice (“DOJ”) announced a multi-agency and multi-state coordinated law enforcement action against 35 individuals involved in an alleged $2.1 billion genetic cancer testing scheme. The alleged scheme involved the payment of illegal kickbacks and bribes to medical professionals in exchange for the referral of Medicare beneficiaries for expensive genetic testing. The individuals involved are from a variety of states, including Florida, South Carolina, Georgia, and Texas. Officials at the Justice Department and Health and Human Services Department Office of the Inspector General said charges were filed in Florida, Texas, Louisiana and Georgia in “one of the largest healthcare fraud schemes ever charged.” The defendants in these five federal districts were associated with dozens of telemedicine companies and cancer genetic testing laboratories. The DOJ said this is one of the largest healthcare fraud schemes ever charged. Among those charged on Sept. 27 were 10 medical professionals, including nine doctors.

Who was involved?

35 individuals were involved in the scheme to defraud the federal health care system out of $2.1 billion. Among those facing charges was Khalid Satary of Suwanee, Georgia, the owner of Clio Laboratories. Mr. Satary was accused in an indictment of soliciting medically unnecessary genetic cancer tests and paying illegal bribes and receiving kickbacks. The Federal Government was able to connect Clio Labs to the scheme that defrauded the U.S. health system via a report by Reuters that raised questions about Clio’s Medicare billing.

Elite Medical Laboratories and medical billing company Laboratory Experts were all included in the investigation through their connection to Clio Labs. Others charged included Minal Patel, the founder of Georgia-based LabSolutions, and Jamie Simmons, the founder of two telemedicine companies called MedSymphony and Meetmydocc LLC. Patel is accused of defrauding the Medicare and Medicaid insurance programs in connection with genetic cancer tests and paying bribes. Simmons is charged with conspiring to commit healthcare fraud and paying and receiving kickbacks that led to Medicare billings of more than $56 million. 18 other defendants were charged in the Southern District of Georgia, including two “telemedicine” physician recruiters, seven physicians, and two nurse practitioners. In total, the 19 defendants charged in the Southern District of Georgia were responsible for over $400 million in genetic testing, durable medical equipment and pain cream billing to Medicare, according to court documents.

How the schemes worked

According to a report by Reuters, the fraud scheme targeted the elderly through sales representatives. After being contacted by a representative, elderly patients would send in a cheek swab they were told could be tested to help them understand their risks of developing cancer, or whether their genetics would respond to potential drug treatments. These tests would then be sent to doctors, who may or may not ever know or see these patients. The doctors would sign off on these tests as “medically necessary,” and send them to testing facilities so they may get paid by Medicare. However, most of the tests were allegedly not relevant to the patient’s medical history. Investigators also found that some of the doctors signed off on the results without discussing them with the patient.

Outcome of the investigations

This issue has become increasingly serious for a few reasons. First, the use of genetic testing, which helps people determine their risks of developing cancer and other diseases, has skyrocketed in the United States since 2015. For Medicare, the public insurance program for elderly and disabled Americans, payouts for genetic tests jumped from $480 million in 2015 to $1.1 billion in 2018, a Reuters analysis found.

The Fraud Section leads the Medicare Fraud Strike Force. Since its inception in March 2007, the Medicare Fraud Strike Force, which maintains 15 strike forces operating in 24 districts, has charged nearly 4,000 defendants who have collectively billed the Medicare program for more than $16 billion. In addition, The Department of Health and Human Services’ (“HHS”) Centers for Medicare & Medicaid Services (“CMS”), working in conjunction with the HHS and Office of the Inspector General (“OIG”), are taking steps to increase accountability and decrease the presence of fraudulent providers.

CMS Administrator Seema Verma said that to prevent additional financial losses, the federal agency “has taken swift action to protect the Medicare Trust Funds from the providers who allegedly have fraudulently billed over $1.7 billion.” The testing could also financially harm the patient down the road, she adds. For example, if, in the future, the patient’s legitimate doctor determines that the patient actually needs a genetic test for a certain condition, Medicare likely won’t cover it, citing an earlier payment. The U.S. Department of Health and Human Services Office of Inspector General has previously issued a fraud alert for consumers in an effort to educate the public about such schemes.