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Genova Diagnostics to Pay up to $43M to Resolve Test Fraud Allegations

NEW YORK – Clinical lab firm Genova Diagnostics has agreed to pay approximately $43 million to resolve allegations that it violated the False Claims Act, including allegations that it billed federal health insurance programs for medically unnecessary tests.

The US Department of Justice announced the settlement Monday. Under the terms of the deal, Asheville, North Carolina-based Genova will surrender $17 million in claims funds held by Medicare and TRICARE and pay up to another $26 million contingent upon certain financial events occurring in the next five years.

The company has also entered into a five-year corporate integrity agreement with the US Department of Health and Human Services Office of Inspector General that requires it to establish and maintain a compliance program and engage an independent review organization.

Genova was accused of improperly submitting claims to Medicare, TRICARE, and the federal employee health program for its IgG allergen, NutrEval and GI Effects lab tests, engaging in improper billing techniques, and paying compensation to three phlebotomy vendors in violation of the Stark Law, which prohibits physician self-referral.

The misconduct was brought to light by former Genova VP and CMO Darryl Landis through the whistleblower provisions of the False Claims Act. Landis will receive roughly $6 million as part of the settlement.

"Government healthcare programs are designed to provide beneficiaries with care that is medically reasonable and necessary," Jody Hunt, assistant attorney general of the Department of Justice’s Civil Division, said in a statement.  "Providers of taxpayer-funded federal healthcare services will be held accountable when they knowingly cause false claims to be submitted for services that do not meet this standard of care."