Genotox Laboratories: Volume Commissions and the 22-Class Default

In the Genotox Laboratories settlement, the Austin, Texas laboratory agreed to pay at least $5.9 million to resolve allegations of kickbacks to third-party marketers and unnecessary drug testing. Genotox admitted paying marketers a percentage of federal testing revenue and offering forms that preselected broad test menus for all or nearly all of a provider’s patients. A form called a custom profile could make the same expensive testing routine across a practice. The customization was the provider’s, not the patient’s.

The Department of Justice announced the settlement on April 4, 2023. A former Genotox billing manager brought the False Claims Act qui tam case. The complaint described what someone inside billing could see: the profile behind an order, the code used to bill it, and instructions about which code would bring in more money.

What Genotox Admitted About Marketer Commissions

As part of the civil settlement, Genotox admitted and accepted responsibility for paying independent contractor marketers a percentage of the revenue it received from testing orders they facilitated or arranged. The company called them 1099 representatives. The payments came from revenue billed to Medicare, the Railroad Retirement Board and TRICARE.

The government’s kickback allegations covered 2014 through 2020 and concerned independent sales representatives and marketing firms that arranged or recommended laboratory testing. The Justice Department described those payments as violations of the Anti-Kickback Statute.

The Custom Profile Chose the Tests in Advance

Genotox also admitted offering health care providers custom-profile order forms that preselected tests for all or nearly all of their patients. Genotox then performed and billed the tests, generally in the highest reimbursement categories. A provider’s earlier selection could carry forward across patients with different medical needs.

The whistleblower’s complaint gave a concrete example from a podiatry practice. It alleged that every patient who supplied a urine sample would receive full presumptive and definitive testing for every drug on the profile, regardless of that patient’s medical need or diagnosis. The form determined the breadth of testing before the individual sample reached the laboratory.

The complaint also alleged that the name of the form had changed:

Calling the form custom made it sound tailored. The complaint’s allegation was that the standing order underneath it still determined what happened to each sample.

Order-form design had been a laboratory compliance issue long before this settlement. The 1997 Laboratory Medicine article Model Plan Helps Laboratories Fight Fraud described government recommendations for requisitions that let physicians document the medical necessity of each test. It also described physician acknowledgments for customized profiles, monitoring the continued validity of standing orders, and analysis of test use by billing code.

ToxDirect and the Reused Diagnosis

The complaint alleged another way to carry an old order forward. Through ToxDirect, Genotox allegedly mailed urine drug test kits to patients at home without a doctor’s order. When samples came back, the complaint said, Genotox billed as though testing had occurred in the office under the provider’s custom profile or standing order.

The alleged shortcut reached the diagnosis field too. According to the complaint, Genotox used diagnosis codes from patients’ previous orders to populate its electronic ordering system for the new claims.

Why G0483 and the 22-Class Default Matter

G0483 covers definitive drug testing for 22 or more drug classes, the highest of the four G0480 to G0483 tiers. The Medicare laboratory fee-schedule categories increase with the number of classes tested: G0480 covers one to seven, G0481 covers eight to 14, and G0482 covers 15 to 21.

The complaint’s profile example ordered both presumptive screening for the presence of drugs and definitive testing to identify specific drugs and their concentrations.

The government’s account of Genotox’s admitted custom profiles specifically included definitive testing at the highest class tier. The profile affected what Genotox performed and billed while the revenue affected the marketer’s compensation.

The complaint made a separate allegation about code selection. It said Genotox had obtained the proprietary code 0007U for its ToxProtect test but continued using G0483. According to the complaint, the proprietary code paid $136 less per test. The whistleblower alleged that the chief operating officer explicitly directed billing to keep using the higher-paying code:

The alleged instruction supplies something a billing total cannot: a decision inside the company about the code and the money. The profile allegation concerns which tests were ordered. The code allegation concerns how the work was billed. Both lead back to choices made before the government received a claim.

Genotox’s Deferred Prosecution and Civil Settlement

Genotox’s deferred prosecution agreement resolved a parallel criminal investigation into the same conduct.

The civil allegations covered claims for tests that were not covered or not reasonable and necessary from 2014 through 2022, including blanket orders and routine standing orders.

Do Doctors Get Kickbacks for Ordering Tests?

Laboratory kickback allegations can concern benefits supplied to a medical practice as well as cash commissions paid to marketers. In Genotox’s case, the complaint alleged that laboratory-funded specimen collectors, also called specimen processors, performed office and clerical work for a referring practice beyond collecting and processing specimens. It also alleged that payments described as office rent concealed additional kickbacks.

The complaint’s healthcare fraud allegations also included volume incentives at the collection stage. It alleged that nearly all of Genotox’s specimen collectors were paid according to the number of samples collected, and that some also received payment directly from the practices where they worked.

When Are Toxicology Tests Unnecessary?

In the Genotox settlement, the government alleged unnecessary testing through blanket and routine standing orders applied across a practice. The clinical question underneath that allegation is what testing the individual patient’s care called for.

Urine drug testing helps clinicians evaluate patients receiving controlled substances or treatment for substance use disorders. The 2021 Journal of Family Practice review Urine Drug Screening: A Guide to Monitoring Tx With Controlled Substances recommends a risk-based approach to testing frequency. It describes frequency changing with the patient’s history, toxicology results and ongoing assessment.

The review links insurance fraud to practices with a financial stake in testing:

For a billing or compliance employee, the useful comparison is between the testing selected by the profile and the clinical reason for that patient’s tests. The Genotox admission makes the first side of that comparison unusually concrete: a provider’s preselected menu, applied across the practice.

The Settlement, Whistleblower Reward and Integrity Agreement

Genotox agreed to a minimum civil payment with additional amounts due if specified financial contingencies occurred. The Justice Department said the settlement amount reflected the company’s ability to pay. It announced that the former billing manager would receive approximately $1 million as the whistleblower’s share.

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers.

The settlement also came with a five-year Corporate Integrity Agreement with the Department of Health and Human Services Office of Inspector General. The announced requirements included maintaining a compliance program, implementing a risk assessment program, and hiring an independent review organization to examine Medicare and Medicaid claims.

The OIG’s agreement listing lists the agreement as suspended.

Precision Toxicology and the Same Ordering Problem

Precision Toxicology agreed to a $27 million settlement in October 2024 over allegations that included unnecessary urine drug testing and free items supplied to referring physicians. The government alleged that its custom profiles operated as standing orders for large test menus without individualized assessments.

The shared feature is the ordering form. Genotox’s admitted marketer commissions and Precision’s alleged benefits to physicians put financial incentives behind the same push for broad testing.

You Know How the Profile Became a Claim

If you saw broad test menus become routine claims while commissions rose with the revenue, talk with our whistleblower experts. We build the case with you around the ordering decisions and financial incentives, bring in laboratory fraud whistleblower lawyers who understand toxicology billing, and stay beside you through the case.