Recently, Genotox Laboratories Ltd. agreed to pay at least $5.9 million to resolve False Claims Act allegations that the company paid volume-based commissions to third party marketers and submitted claims to federal health care programs for unnecessary drug tests. Genotox also entered into an eighteen-month Deferred Prosecution Agreement (DPA) with the United States Attorney’s Office for the Western District of Texas to resolve a criminal investigation regarding the same conduct.
Genotox is a reference laboratory that was established in 2012 and specializes in urine drug testing, pharmacologic testing, and infectious disease testing. The case against Genotox was initially brought in September 2020 under the qui tam provisions of the False Claims Act by Genotox’ former billing manager.
According to the settlement, from January 1, 2014, through October 31, 2020, Genotox allegedly knowingly and willfully paid kickbacks to independent contractor sales representatives and marketing firms to arrange for – or recommend – the ordering of Genotox’s laboratory testing, in violation of the Anti-Kickback Statute. Genotox did admit and accept responsibility for paying independent contractor marketers, referred to as “1099” representatives, a portion of the revenue the company received from Medicare, the Railroad Retirement Board, and TRICARE for lab testing orders that were facilitated or arranged for by the 1099 representatives.
The settlement also resolved allegations that from...
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