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Medically Unnecessary Tests Result in Approximately $43 Million Recovered by DOJ in Qui Tam Settlement

by Hoyer Law Group, PLLC | May 19, 2021 | Whistleblowers

Kyle Mosey

The Department of Justice (DOJ) recently settled a False Claims Act case amassing a $43 million recovery of misused taxpayer money. The False Claims Act allows individuals to file a lawsuit on the government’s behalf when they possess knowledge of fraudulent claims by independent actors or corporations that result in a financial loss for the United States Government. These individuals are commonly referred to as whistleblowers. If the government recovers damages, then the whistleblower is entitled to between 15-30% of the recovered amount. Congress created this whistleblower reward system to entice more individuals with information regarding fraud against the government to come forward and expose the practice. Without the help of whistleblowers, the government would likely be unable to detect much of the fraudulent activity in which some individuals and certain corporations engage.

The Genova Settlement for Medically Unnecessary Tests

This settlement originated from allegations by Dr. Darryl Landis against Genova Diagnostics Inc., a clinical laboratory services company based in Asheville, North Carolina. Dr. Landis alleged that Genova had:

  1. submitted invalid claims based on medically unnecessary tests to Medicare, TRICARE, and the federal employee health program,
  2. improperly billed clients for these unnecessary tests, and
  3. violated the physician self-referral prohibition, or Stark Law, by referring patients based on Genova’s monetary gain rather than the patient’s medical needs.

The Stark Law ensures physicians make test referrals based on the patient’s medical requirements and not the physician’s financial interest.

Pursuant to the settlement, Genova agreed to pay up to $43 million to resolve its violations of the False Claims Act. As a part of this settlement, Dr. Landis will receive approximately $6 million of that amount based on his participation as a whistleblower in this qui tam action.

Additionally, Genova has entered a five-year Corporate Integrity Agreement (CIA) with the Department of Health and Humans Services Office of Inspector General. This CIA requires Genova to sustain a compliance program that requires an independent review organization to provide oversight for their business dealings. Some additional requirements of the CIA include:

  • establishing a compliance committee to train employees,
  • developing written standards for the workplace, and
  • forming a confidential disclosure program for employees to report noncompliance.
Significance of Qui Tam Lawsuits in Federal Healthcare

Federal healthcare programs financially assist individuals who cannot afford healthcare on their own by utilizing taxpayer money to cover certain medical costs. These programs also require strict testing procedures for medical labs such as Genova to ensure the conducted tests are necessary for individual patients. These strict requirements are intended to prevent medical labs from using taxpayer money improperly or unnecessarily for their benefit. When individuals or private entities take advantage of testing procedures, in an attempt to receive money for medically unnecessary tests, the most effective way to recover these misused funds is typically through a False Claims Act lawsuit.

Impacts of this Settlement and Future Landscape of Medical Fraud

This settlement illustrates the importance of whistleblowers and qui tam actions to police fraud committed against the government. Had Dr. Landis not stepped up and brought the allegations against Genova to the government’s attention, it is hard to say how far their false claims may have gone or how much money could have been lost. With most medical fields growing exponentially over the last year or so, the importance of whistleblower claims that lead to investigations from the DOJ has become more essential than ever. Medical labs are conducting tests at an unprecedented rate, and it has become even more crucial to ensure every corporation is conducting these tests for the patient’s needs and not their own.

Our team of accomplished whistleblower attorneys can help determine if you have a False Claims Act case. After a confidential case review, we can help you report the fraud and fight for your rights in the event of retaliation from your employer.

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