Six related False Claims Act (FCA) qui tam lawsuits initiated by separate whistleblowers in the United States District Court for the Eastern District of Louisiana have recently settled. Earlier this month, the Department of Justice announced a settlement of over $42.6 million with UTC Laboratories, Inc. (RenRX) and three of its principals. UTC had allegedly violated the FCA by paying illegal kickbacks and submitting claims to Medicare and Medicaid for medically unnecessary tests. The amount of the whistleblowers’ shares of the settlement is not yet determined. As part of the agreement, UTC has also agreed to not participate in any federal healthcare programs for 25 years.
UTC, a New Orleans based medical laboratory, specialized in performing genetic testing. The allegations in the several lawsuits involved in this settlement concern UTC paying kickbacks to physicians in exchange for genetic testing referrals and orders of medically unnecessary genetic tests. These tests were almost exclusively performed for Medicare and Medicaid patients and involved determining whether patients had genetic markers indicating the potential for adverse reactions to certain medicines. However, the allegations brought by the whistleblowers and governments asserted that many of the tests were not medically necessary and thus violated federal regulations. Further, the whistleblower complaints allege that UTC was chosen by the physicians to perform the tests as a direct result of cash payments and other bribes given to the referring physicians.
In the Department of Justice press release announcing the settlement, Special Agent in charge C.J. Porter of the Department of Health and Human Services Office of Inspector General warned that “[g]enetic testing scams are becoming all too common.” The many whistleblowers who filed qui tam lawsuits against UTC have played a critical part in exposing one such scam and deterring others who may contemplate operating such a scheme in the future. In addition to the apparent waste of taxpayer dollars, frauds like the one allegedly run by UTC cripple the integrity of our healthcare system. Such schemes incentivize physicians and other healthcare providers, through payments of cash, to make decisions and perform procedures, not with the best interest of the patient in mind, but rather their wallets.
Read More: What is Qui Tam?