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Genotox Labs Pays $5.9M to Settle Testing Fraud Claims

NEW YORK – Austin, Texas-based Genotox Laboratories has agreed to pay at least $5.9 million to resolve allegations that it violated the False Claims Act, the US Department of Justice said this week.

The lab is alleged to have paid volume-based commissions to third-party marketers in violation of the Anti-Kickback Statute and submitted claims to Medicare, the Railroad Retirement Board (RRB), and Tricare for unnecessary drug tests, the DOJ said.

In parallel proceedings, Genotox entered into an 18-month deferred prosecution agreement with the US Attorney's Office for the Western District of Texas to resolve a criminal investigation of the same conduct.

The settlement resolves allegations that from 2014 to 2020, Genotox paid kickbacks to independent sales representatives and marketing firms to drive orders of its laboratory testing and that from 2014 to 2022 it submitted claims to Medicare, the RRB, and Tricare that were not covered and/or were not reasonable and necessary, including blanket and routine standing orders for drug testing all patients in a provider's practice.

Under the settlement, Genotox must pay $5.9 million, plus additional amounts if certain financial contingencies occur. The company has also entered into a five-year corporate integrity agreement with the US Department of Health and Human Services' Office of the Inspector General under which it will be required to maintain a compliance program, implement a risk assessment program, and hire an independent review organization to review its Medicare and Medicaid claims.

The settlement also resolves whistleblower claims brough under the False Claims Act by Alex DiGiacomo, Genotox's former billing manager, who will receive roughly $1 million.