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Lab Owner in $130M Genetic Testing Fraud Case Pleads Guilty

NEW YORK – The owner of two Pittsburgh-area testing laboratories has pleaded guilty to his role in a $130 million genetic testing fraud scheme.

US Attorney Scott Brady announced recently that Ravitej Reddy pleaded guilty in federal court to three conspiracy counts and one substantive count related to the payment and receipt of illegal kickbacks. He agreed to pay restitution of more than $77 million to the Centers for Medicare and Medicaid Services.

Reddy admitted that from May 2018 through April 2019 he participated in three separate conspiracies to illegally bill Medicare for cancer genomic testing and pharmacogenetic testing involving the two labs he owned, Personalized Genomics, in Pittsburgh, and Med Health Services Management, in Monroeville, Pennsylvania. He also admitted to paying illegal kickbacks to a marketing entity in connection with acquiring PGx and other testing samples between October 2017 and April 2019.

Reddy acquired thousands of testing samples and corresponding prescriptions from Medicare beneficiaries throughout the US with the help of business consultants, marketers, and the operator of a Florida telemedicine company. Contract physicians sent the samples to Personalized Genomics and Med Health Services even though the doctors hadn’t conducted adequate visits, weren’t treating the patients for cancer, didn’t use the test results in treatment of the patients, and generally weren't qualified to interpret the test results.

Reddy admitted to submitting claims for testing that regularly exceeded $12,000 per Medicare beneficiary and billing Medicare more than $127 million for the testing with reimbursements of approximately $60 million.

For each of the three conspiracy counts, the defendant faces a maximum sentence of five years in prison, a fine of $250,000, or both. For the substantive kickback charge, he faces a maximum sentence of 10 years in prison, a fine of $250,000, or both.