Genotox Laboratories agreed to pay at least $5.9 million to settle charges it violated the False Claims Act (FCA) by paying volume-based commissions to third-party marketers and submitting claims to federal healthcare programs for unnecessary drug tests.

As part of the settlement, Texas-based Genotox entered into a five-year corporate integrity agreement with the Department of Health and Human Services Office of Inspector General. In a parallel proceeding, the lab entered into an 18-month deferred prosecution agreement (DPA) with the U.S. Attorney’s Office for the Western District of Texas.

The settlement resolves claims brought under the qui tam provisions of the FCA by Alex DiGiacomo, Genotox’s former billing manager. He will receive approximately $1 million as part of the settlement.

The details: The Anti-Kickback Statute prohibits offering, paying, soliciting, or receiving remuneration to induce referrals of items or services covered by Medicare and other federally funded healthcare programs.

From 2014-20, Genotox paid independent contractor marketers a percentage of the revenue it received from billing Medicare, the Railroad Retirement Board, and TRICARE for lab testing orders facilitated or arranged for by the marketers, the Department of Justice (DOJ) alleged Tuesday in its press release.

The lab admitted it offered healthcare providers order forms, known as “custom profiles,” for each provider to preselect the tests to order, which Genotox then performed and billed for all or nearly all of the provider’s patients, the DOJ said. These profiles were generally at the highest reimbursement categories, according to the agency.

Compliance ramifications: The DPA resolves a criminal investigation regarding the same alleged misconduct. The corporate integrity agreement requires the company to maintain a compliance program, implement a risk assessment program, and hire an independent organization to review Medicare and Medicaid claims at Genotox.

“The [DPA] ensures that Genotox will live up to its compliance obligations,” said U.S. Attorney Jaime Esparza for the Western District of Texas in the DOJ’s release.

Genotex did not respond to a request for comment.

Jeff Dale is the Digital Editor of Compliance Week. He previously worked as a copy editor with the Boston Herald and Patriot Ledger in Quincy, Mass., and is a former city editor of The Hour Publishing Co. in Norwalk, Conn.

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