Genova Diagnostics Inc. Lab pays up to $43 million to settle charges of Medicare fraud on clinically unnecessary lab gastro effects tests

Genova Diagnostics had agreed to pay up to $43 million to settle allegations that it had fraudulently billed the federal government for unnecessary lab services. The complaint filed with the federal court in May 2018, Genova allegedly sought and received payment for fecal, blood and urine tests that have not been scientifically proven to diagnose any medical condition. The company also allegedly classified some of those tests under false billing codes to defraud Medicare and Medicaid. According to the Complaint, Genova offers unconventional tests including test panels relating to hormones, food allergies and gastro-intestinal targets. Those tests, it was alleged were not medically necessary in accordance with Medicare and Medicaid regulations. One was a panel of fecal stool tests assessing 46 biomarkers of gastrointestinal function. Goneva’s website said that the GI effects panel provides immediate actional clinical information for the management of gut health including celiac disease. It recommends and markets it for use in diagnosing irritable bowel syndrome, inflammatory bowel disease, diabetes, obesity, cardiovascular disease and autoimmune disorders. The Complaint states that there are no published, peer-reviewed studies or papers or high-quality clinical studies to assess, demonstrate, or establish clinical validity.

The whistleblower, in this case, is Daryl Landis, M.D. a board-certified physician who was hired as Genova’s CMO tasked with developing medical necessity evidence for the tests. However, over time, he raised concerns and warned Genova that clinical support for the tests was non-existent for the medical necessity and he also warned that the billing of Medicare and Medicaid was improper. He is represented in this case by Womble Bond Dickenson LLP in Winston-Salem NC.

In response to his diligence, Landis alleges, Genova’s then-CEO Chris Smith disregarded his concerns as “overly conservative,” cut his department’s budget and repeatedly excluded him from meetings with company leadership. The complaint claims that Genova then falsely accused Landis of “employment-related misconduct” and fired him.

Genova will forfeit over $17 million in payments from Medicare and TRICARE, the civilian health benefit system for the U.S. military. The company will then enter a five-year “corporate integrity agreement” involving an outside review organization and additional federal compliance requirements.

Also over the next five years, Genova will pay the government 13% of any net annual revenue above $100 million and 20% of any asset sales over $1 million. Those payments will be capped at $26 million, creating a total potential liability of $43 million.

Jeffrey Newman and his firm represent whistleblowers nationwide including in several cases involving laboratory testing Medicare and Medicaid fraud. He can be reached at Jeff@JeffNewmanLaw.com or at 617-823-3217.