Crestar Labs: Paying for the Swab and the Signature

The Crestar Labs fraud case exposed kickbacks for samples and signed genetic-test orders used by its owner and co-conspirators to bill Medicare and Medicaid over $100 million. The Justice Department’s account of the criminal trial describes marketers collecting DNA at senior health fairs and through door-to-door visits, then obtaining orders from doctors paid to sign them. For someone inside a laboratory or its marketing operation, the revealing connection is between the sample, the signature and the money paid for both.

Crestar Labs operated laboratories based in Spring Hill, Tennessee. The initial criminal-charge announcement also identified Karemore Labs in Baltimore, Maryland, and Martis Labs and CrestarDX in Dallas, Texas, as laboratories owned by its chief executive. He worked with outside marketing companies to bring in genetic-testing business. The trial evidence showed that sham contracts and kickbacks connected the participants, with elderly and low-income federal healthcare program beneficiaries supplying the genetic material.

How Crestar Labs’ Genetic-Test Orders Were Bought

Crestar’s criminal trial showed payments on both sides of the order: marketers received kickbacks for samples and doctor orders, while purported telemedicine doctors received kickbacks for signing the orders sent to the laboratory. The recruitment, order signing and laboratory billing were connected parts of the business.

The marketers were not health care professionals. They collected buccal swabs at senior health fairs, in low-income housing, through door-to-door marketing and elsewhere. The tests then went through doctors who signed off on the laboratory orders. Crestar’s owner and his co-conspirators paid the marketers for the samples and orders that fed the testing operation.

The Justice Department’s account of the initial criminal complaint supplies another part of the story. Prosecutors described a scheme involving genetic testing in cancer patients. They alleged that the owner contracted with marketing companies to recruit elderly beneficiaries, including at nursing homes, and paid for orders and tests without regard to medical necessity. According to that complaint, the telemedicine doctors did not treat the patients and often did not even speak with them. Patients or their treating physicians often never received the results.

In the government’s account, elderly patients supplied the samples and taxpayers paid the bills, while results often never reached patients or their treating physicians. The sample and order had already served their commercial purpose by reaching the laboratory.

The division of work in laboratory medicine makes the order especially valuable. The treating practitioner orders the test and keeps the medical-necessity documentation, while the laboratory performs the service and submits the claim. Buying access to a physician’s signature reaches the part of that chain meant to connect the test to the patient’s care.

What Crestar Billed and What Medicare Paid

The initial Crestar charging announcement reported approximately $86 million billed to Medicare for genetic testing and almost $14 million paid on those claims. Those were the government’s figures in July 2021, covering billing from late 2017 through the time of the announcement.

The marketer’s compensation concerns another transaction: what the laboratory paid to obtain the sample and order. Connecting that payment to the laboratory’s claims and Medicare’s payments explains how a referral arrangement became government-funded testing.

The Jury Convicted on Kickbacks and Acquitted on Other Counts

The jury found Crestar’s owner and the owner of its marketing contractor guilty of conspiracy to violate, and violations of, the Anti-Kickback Statute. It acquitted them on separate health-care-fraud counts. The November 1, 2024 announcement also reported a money-laundering conviction against Crestar’s owner.

The marketing contractor was Flojo Recruiting, which operated as Secure Health in Utah. Its owner stood trial alongside the laboratory owner. The verdict reached the people running both ends of that laboratory-marketing relationship.

Six other defendants had pleaded guilty before that trial. They included Crestar’s former vice president of sales and its former director of client services and vice president of operations. Others ran Genetix LLC, a South Carolina marketing company, or were principals of Freedom Medical Labs, LLC, a Maryland marketing company. Both companies contracted with Crestar. Each of these defendants pleaded guilty to an Anti-Kickback Statute violation and conspiracy to commit health care fraud.

Do Doctors Get Kickbacks for Ordering Tests?

Yes. In Crestar’s criminal case, the trial evidence showed that purported telemedicine doctors received kickbacks for signing laboratory orders. The physician’s signature was something the scheme bought, alongside the patient’s sample.

A Chicago physician in the same prosecution was convicted by a separate jury in September 2023 of conspiracy to violate the federal Anti-Kickback Statute. According to the Justice Department’s account of his trial, purported telemedicine companies paid him kickbacks for signed orders for thousands of cancer genetic tests, for patients he never met and results he never reviewed. Marketers sent the patients’ swab kits to a laboratory in Spring Hill, Tennessee, which paid them kickbacks and billed Medicare and Medicaid. The owner of Advanced Tele-Genetic Counseling separately pleaded guilty to a conspiracy involving illegal kickbacks and defrauding Medicare and Medicaid.

Those roles show why the order side deserves attention of its own. The laboratory could receive a specimen from a marketer and a signed order from a medical professional. The criminal evidence connected the signed order to a payment for the signature. Someone working with the orders may see that relationship even when the laboratory’s billing happens elsewhere.

The clinical purpose of the form has been explicit in laboratory guidance for decades. The 1997 Laboratory Medicine article Model Plan Helps Laboratories Fight Fraud described the inspector general’s recommendation that requisition forms provide space for the physician to document each test’s medical necessity with a diagnosis code. The form was supposed to carry the reason for testing. Crestar’s trial account shows what happens when the signature on it becomes a purchased service.

Why Genetic-Testing Orders Carry So Much Money

Genetic testing accounts for a much larger share of Medicare laboratory spending than of test volume. In the inspector general’s report on 2024 laboratory spending, genetic tests of human and pathogen material represented 5% of tests paid under Medicare Part B but 43% of Part B laboratory spending.

The contrast helps explain the commercial attraction of obtaining genetic-test orders at volume. A relatively small part of laboratory testing commands a large part of the money. In Crestar’s criminal trial account, marketers and ordering doctors received payments for bringing that testing business to the laboratory.

LabSolutions Shows Another Side of the Paid-Order Business

The Justice Department’s account of the LabSolutions criminal case describes patient brokers signing sham advertising contracts to conceal kickbacks.

What a Genetic-Testing Whistleblower May Recognize

An insider may recognize the paid-order arrangement before seeing a government claim. The marketing employee sees how beneficiaries are recruited. The person handling requisitions sees which doctors sign the orders. The laboratory employee sees which samples arrive with them, and the person handling payments sees what the marketing business receives.

Crestar’s case connects those views. Non-medical marketers obtained the DNA, doctors received kickbacks for their signatures, and the laboratory owner and his co-conspirators billed federal programs for the resulting tests. A contract described as marketing can therefore matter as much as a laboratory claim when it explains how the work reached the laboratory.

We work with you to turn what you know about those arrangements into a laboratory fraud whistleblower case. A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers.

You Know How the Orders Reached the Lab

If you know who paid for the samples or signatures, talk with our whistleblower experts about the genetic-testing business you saw. We work beside you to build your strongest laboratory fraud whistleblower case around those connections and bring in laboratory fraud whistleblower lawyers who understand genetic testing and referral payments. You bring the view from inside the business, and we stay with you through the pursuit of the case.