COVID-19 and Genetic Testing Kickback Scheme and Conspiracy to Commit Fraud Leads to Guilty Plea by Healthcare Marketer

Last week, the United States Department of Justice (“DOJ”) announced that a Georgia marketer pled guilty for his role in a conspiracy to violate the Federal Anti-Kickback Statute and commit health care fraud. The marketer was charged with taking part in a scheme that provided medical testing companies with patient referrals for medically unnecessary and highly reimbursed cancer genetic screening tests from September 2019 through March 2020. As a result of each test for which the testing company was able to obtain reimbursement, the marketer was paid between $1,000 to $1,500. This arrangement was documented in invoices and contracts that were intended to disguise the underlying referral relationship. Moreover, at the outset of the pandemic, the conspiracy was alleged to have expanded to include referrals for Covid-19 testing, particularly when those tests were “bundled” with more expensive panels. As a result of the arrangement, the co-conspirators intended for the testing companies to submit more than $1.1 million dollars in claims to CMS for reimbursement.

The marketer faces up to ten years in prison for the count of conspiracy to commit health care fraud and up to five years in prison for the conspiracy to violate the Federal Anti-kickback Statute. Each offense is punishable by a $250,000 fine or twice the gain or loss from each offense.  

The DOJ’s activities reinforce its focus on identifying and prosecuting fraudulent health care schemes related to improper referrals and medically unnecessary claims. Any laboratory marketing relationship must be structured appropriately to avoid improper kickbacks and comply with applicable federal and state laws. Offering commission-based or per-referral compensation to marketers or healthcare providers in exchange for referrals will almost universally result in liability to the laboratory and the referral source. Contact Frier Levitt for guidance and review of your current or proposed healthcare business model and marketing agreements to ensure compliance.