Personalized Genomics: Buying the Swab and the Prescription

The Personalized Genomics fraud case involved kickback schemes behind more than $127 million in Medicare genetic-testing claims and approximately $60 million in reimbursements, as its owner admitted in his guilty plea. Marketers supplied cheek swabs, a telemedicine business supplied access to prescriptions, and the laboratories supplied the bills. For someone inside a laboratory or its marketing operation, the revealing detail is how the marketers were paid: their compensation depended on the Medicare money those samples brought back.

The Justice Department identified the owner’s laboratories as Personalized Genomics in Pittsburgh and Med Health Services Management in Monroeville, Pennsylvania. The owner admitted participating in three separate kickback conspiracies involving cancer genomic testing and pharmacogenetic testing.

How Personalized Genomics Got the Swabs

In his guilty plea, the owner admitted that marketers used targeted campaigns to obtain Medicare beneficiaries’ cheek swabs through home kits and purported health fairs across the United States. Business consultants, marketers and a telemedicine operator participated in acquiring thousands of samples and the corresponding physician prescriptions the laboratories needed to bill Medicare.

The marketer’s work did not end at persuading someone to take a test. According to the plea announcement, marketers received percentage-based kickbacks tied to Medicare reimbursements for the beneficiaries whose samples they obtained and submitted to the laboratories.

How the Telemedicine Prescriptions Were Obtained

Prosecutors alleged that the prescriptions came through a separate paid arrangement. The criminal information, as described by the Justice Department, alleged that the operator of a Florida telemedicine entity received kickbacks for obtaining genetic-test prescriptions from contract physicians. Those physicians reviewed beneficiaries’ personal and family medical histories.

The information alleged that the physicians authorized testing for greater than 95% of beneficiaries despite failing to conduct proper telemedicine visits. It also alleged that they were not treating the beneficiaries for cancer or cancer symptoms, generally lacked the qualifications to understand and interpret the results, and did not use them in treatment. The prescriptions unlocked payment. The results went unused by the doctors who ordered them, according to the information. Taxpayers funded the payments, and the kickbacks diverted resources from the health care program serving Medicare beneficiaries.

Medicare’s ordering rule puts the treating clinician at the start of the transaction. In this case, prosecutors described prescriptions obtained for marketer-supplied swabs while the physicians were detached from the treatment the results were supposed to inform. The alleged gap was inside the ordering relationship, before the laboratory submitted its claim.

Cancer Genetic Testing and Pharmacogenetic Testing Had Different Purposes

The owner admitted submitting claims that regularly exceeded $12,000 per beneficiary for cancer genomic testing of future cancer risk and pharmacogenetic testing of medication response. The commercial incentive was attached to an expensive set of claims generated from a readily collected specimen.

The Billing Address Paid Better Than the Testing Location

In his guilty plea, the owner also admitted taking advantage of the laboratories’ locations in the Medicare coverage area with the highest reimbursement rates in the country. The plea announcement’s account of the testing arrangements says the court was told that neither laboratory possessed properly validated equipment to conduct CGx testing on-site. Samples had to go to a reference laboratory outside that lucrative coverage area for testing.

Personalized Genomics and Med Health Services Management nevertheless served as the billing laboratories. The place that generated the claim and the place that performed the cancer genetic test were different, and the owner’s admission made the reimbursement geography part of the scheme.

For a laboratory employee, the send-out arrangement is a concrete part of the story. We compare the send-out results with the billing records to connect who performed the test with who sought payment. That comparison matters when the billing laboratory lacked the equipment to do the work.

Side Deals Through a Second Laboratory

In his guilty plea, the owner admitted to three separate kickback conspiracies. The first involved Medicare billing through Personalized Genomics. Two side arrangements involved billing through Med Health Services Management.

The owner admitted pursuing the side deals partly to increase his share of the profits compared with the Personalized Genomics arrangement. Some participants overlapped, but the groups were not identical. That explains why the second laboratory matters: it provided another billing operation through which the owner pursued a different split of the proceeds.

Apart from the three conspiracies, he pleaded guilty to a separate charge of paying percentage-based kickbacks to an unrelated marketing business for pharmacogenetic and other testing samples between October 2017 and April 2019. Those payments began before the Personalized Genomics conspiracy, which started in May 2018.

What a Genetic-Testing Insider Can Recognize

A separate whistleblower complaint against LabSolutions alleged that scripted screening questions were designed to generate testing referrals.

The Personalized Genomics owner’s admissions concerned payments for samples and the sharing of Medicare proceeds. A bill shows the test. The marketer’s payment records show who shared in its proceeds.

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

You Know How the Samples Became Revenue

If you know who bought the swabs, arranged the prescriptions or shared the Medicare receipts, speak to our Whistleblower Experts about the payments behind the tests. We develop the laboratory fraud case with you and bring in healthcare fraud whistleblower lawyers who understand genetic-test referrals and billing. We stay beside you to build your strongest laboratory fraud whistleblower case from the people, payments and decisions you know.