The U.S. Department of Justice (DOJ) continues to actively target the healthcare industry for False Claims Act (FCA) and other alleged violations, and it took significant steps to further its reach into the telehealth and genetic testing markets this week. Prosecutors in the Southern District of Florida (SDFL) indicted the CEO of a genetic testing company in an alleged referral-source kickback scheme in which, according to the indictment, Medicare paid more than $164 million for gene testing, whether it was needed or not. In the Southern District of Georgia, DOJ filed multiple cases related to what it called a nationwide telehealth scheme, which also involved genetic testing in some cases.
These cases arise at a time when DOJ’s focus on the healthcare industry is reaching new heights, including in SDFL. Based on DOJ’s actions this year alone, it is clear that the government is also increasingly focused on telemedicine and genetic testing. In April, DOJ announced a $1.2 billion takedown focused on telemedicine targets. DOJ is now reportedly preparing for a similarly largescale takedown involving over $1 billion in fraud targeting telemedicine and genetic testing.
As we have written in the past, the line between valid business and fraud is not always as easy to draw as the government claims. The attorney for the CEO in the SDFL case, for example, has said that the unnamed sources of information underlying the indictment have lied about their arrangements with the lab, and moreover, that the lab and its CEO acted at all times on advice of counsel. It is also frequently hard for companies and their principals to know where the line is between mistakes or civil negligence and federal felony violations. The answer is not always simple, but it usually comes down to the volume and quality of evidence showing the intent was actually to lie and cheat, and also the size and scope of the alleged fraud. One thing is perfectly clear, however, companies operating in the fields of telemedicine and genetic testing must pay particular attention to their operations at all levels, and seek competent advice on structuring business arrangements.