<p><strong>Settlement Resolves False Claims Act and Anti-Kickback Statute Allegations Involving CGx/PGx Tests Procured Through Marketing and Telemedicine Scheme</strong></p>



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<p><strong>Introduction</strong></p>



<p>The landscape of federal healthcare fraud enforcement saw another significant development as Genexe, LLC, its parent company Immerge, Inc., Chief Executive Officer Jason Green, and Chief Operating Officer Jason Gross agreed to pay $6 million to the United States government. This settlement, announced by the U.S. Attorney&#8217;s Office for the Eastern District of Pennsylvania, resolves serious allegations that the companies and their executives violated the federal False Claims Act (FCA) and the Anti-Kickback Statute (AKS).<sup></sup> At the heart of the government&#8217;s claims lies a complex scheme alleged to have occurred between July 2018 and December 2019, designed to fraudulently induce Medicare payments for medically unnecessary genetic tests – specifically, cancer genomic (CGx) and pharmacogenomic (PGx) tests – which were purportedly procured through a web of illegal kickbacks involving marketing agents and telemedicine providers.<sup></sup>  ;</p>



<p>This resolution arrives amidst a period of intensified federal scrutiny directed at sophisticated healthcare fraud operations, particularly those exploiting the burgeoning fields of genetic testing and telemedicine. The government&#8217;s pursuit of not only the operating subsidiary (Genexe) but also its parent corporation (Immerge) and the individuals leading them (Green and Gross) underscores a commitment to holding all responsible parties accountable when federal healthcare programs like Medicare are targeted for <a class="wpil_keyword_link" href="https://www.fraudswatch.com/tag/financial-fraud/amp/" title="financial" data-wpil-keyword-link="linked" data-wpil-monitor-id="1429">financial</a> gain.<sup></sup> Such actions signal that corporate structures and executive titles may offer little shield against liability when fraudulent conduct impacts taxpayer funds and patient trust. This report will provide a comprehensive analysis of the Genexe settlement, dissect the mechanics of the alleged fraudulent scheme, delve into the critical legal statutes underpinning the government&#8217;s case (the FCA and AKS), examine how genetic testing and telemedicine were allegedly manipulated, place this case within the context of broader industry enforcement trends, and explore the indispensable role of whistleblowers in bringing such alleged misconduct to light.  ;</p>



<p></p>



<h2 class="wp-block-heading">The Genexe Settlement: Unpacking the $6 Million Resolution</h2>



<p>Understanding the intricacies of this settlement requires identifying the key players, the specific legal violations alleged, the mechanics of the purported scheme, and the precise terms of the resolution.</p>



<ul class="wp-block-list">
<li><strong>Parties Involved</strong>
<ul class="wp-block-list">
<li><strong>Genexe, LLC (dba Genexe Health):</strong> Identified as a Delaware limited liability company with its principal address formerly in Greenwood Village, Colorado, Genexe marketed itself aggressively as a &#8220;one-stop shop&#8221; for genetic and pharmacogenetic profiling. It claimed involvement in all stages, from patient screening and sample collection to laboratory processing. Genexe conducted business within the Eastern District of Pennsylvania, among other locations, but is confirmed to be no longer operational. </li>



<li><strong>Immerge, Inc. (aka Immerge LLC):</strong> This entity, incorporated in both Colorado and Delaware and also based in Greenwood Village, Colorado, controlled Genexe and served as its parent company. Immerge publicly positioned itself as a leading outsourced sales and marketing firm providing solutions to major corporations in diverse sectors like Energy, Telecom, Wireless, and Solar. It operated Genexe specifically as one of its marketing ventures. Like Genexe, Immerge is no longer operating. The involvement of a general marketing firm operating a specialized healthcare marketing arm highlights a potential risk area where standard, aggressive sales tactics might be applied without sufficient understanding or implementation of healthcare&#8217;s unique and stringent compliance rules, particularly the AKS. </li>



<li><strong>Jason Green &; Jason Gross:</strong> These individuals held key leadership positions as Chief Executive Officer and Chief Operating Officer, respectively, for both Genexe and Immerge. Significantly, they also possessed ownership interests in both companies, placing them in positions of direct control and financial interest regarding the companies&#8217; operations and alleged conduct. The government&#8217;s decision to pursue individual executives alongside the corporate entities reflects a common enforcement strategy aimed at deterring future misconduct by demonstrating personal financial accountability for corporate wrongdoing, especially when executives are alleged to have been personally involved or had direct oversight. </li>



<li><strong>Government Agencies:</strong> The investigation and resolution were spearheaded by the U.S. Attorney&#8217;s Office for the Eastern District of Pennsylvania (USAO-EDPA), working in collaboration with the U.S. Department of Health and Human Services, Office of Inspector General (HHS-OIG). This partnership is typical in major healthcare fraud cases, combining prosecutorial authority with specialized investigative expertise in healthcare programs. </li>



<li><strong>Whistleblowers (Relators):</strong> The settlement explicitly resolves claims originally brought forth by private individuals who filed lawsuits under the <em>qui tam</em> provisions of the False Claims Act. These provisions empower citizens with knowledge of fraud against the government to sue on its behalf. </li>
</ul>
</li>



<li><strong>The Core Allegations</strong> The government&#8217;s case against Genexe, Immerge, Green, and Gross centered on alleged violations of two cornerstone federal statutes governing healthcare transactions and billing:
<ul class="wp-block-list">
<li><strong>False Claims Act (FCA) Violations:</strong> The United States contended that the defendants <em>knowingly</em> and <em>improperly</em> caused the submission of false claims to the Medicare program. The core of this allegation was that the CGx and PGx tests billed to Medicare were not &#8220;reasonable and necessary&#8221; for the diagnosis or treatment of the beneficiaries who received them, a fundamental requirement for Medicare coverage. Submitting claims for services that fail to meet this medical necessity standard is a direct violation of the FCA. </li>



<li><strong>Anti-Kickback Statute (AKS) Violations:</strong> Compounding the FCA allegations, the government asserted that the genetic tests were procured through illegal kickbacks, rendering the subsequent claims submitted to Medicare false as a matter of law. The alleged kickback arrangements were multifaceted:
<ol class="wp-block-list">
<li>Genexe/Immerge allegedly paid remuneration to independent marketers, referred to as Independent Business Owners (IBOs), for recruiting Medicare beneficiaries and collecting their DNA specimens. </li>



<li>Genexe/Immerge allegedly paid remuneration to telemedicine providers or the companies employing them to secure the required physician orders for the tests. </li>



<li>Genexe/Immerge allegedly <em>received</em> remuneration back from the medical laboratories that performed the tests and billed Medicare, in exchange for steering the lucrative testing business their way. This complex web of alleged payments, designed to induce referrals and orders at multiple stages, falls squarely within the conduct prohibited by the AKS. The link between AKS violations and FCA liability is direct: the Affordable Care Act established that claims submitted to federal healthcare programs that include items or services resulting from an AKS violation are, by definition, false claims under the FCA. Thus, the government alleged the claims were false both due to lack of medical necessity and because they were tainted by illegal kickbacks. </li>
</ol>
</li>



<li><strong>Timeline of Alleged Conduct:</strong> The government focused its allegations on the period from approximately July 2018 through December 2019. </li>
</ul>
</li>



<li><strong>Dissecting the Alleged Fraudulent Scheme (Step-by-Step)</strong> Based on the government&#8217;s contentions outlined in the settlement announcement, the alleged scheme operated through a coordinated, multi-stage process:
<ol class="wp-block-list">
<li><strong>Aggressive Marketing &; Recruitment:</strong> Genexe initiated marketing campaigns promoting purportedly &#8220;free&#8221; CGx and PGx genetic tests, specifically targeting Medicare beneficiaries. This approach immediately raises red flags, as &#8220;free&#8221; offers are frequently used by fraudsters to lure beneficiaries into schemes involving unnecessary services ultimately billed to Medicare. Genexe employed a network of IBOs to act as field recruiters. </li>



<li><strong>Specimen Collection &; IBO Kickbacks:</strong> These IBOs, characterized as independent contractors often lacking any medical background, were tasked with collecting DNA samples (typically via cheek swabs) from beneficiaries. Critically, this collection often occurred in non-clinical environments such as retail stores, shopping malls, health fairs, churches, retirement centers, and skilled nursing facilities. This method inherently lacks the individualized clinical assessment necessary to determine medical necessity. Concurrently, IBOs collected beneficiaries&#8217; Medicare numbers and other <a href="https://www.fraudswatch.com/beware-of-medical-equipment-scams-in-2024-stay-informed-protect-yourself/amp/" data-wpil-monitor-id="1425">protected health information</a>, filling out laboratory requisition forms. For facilitating these referrals and collections, Genexe allegedly paid the IBOs kickbacks structured on a per-swab basis. Initially around $800 per swab, these payments later increased to between $1,000 and $2,000, depending on the type of test ordered. Such per-referral payments are considered classic kickbacks under the AKS, as they directly incentivize the generation of business regardless of medical need. </li>



<li><strong>Securing Physician Orders via Telemedicine &; Kickbacks:</strong> The collected DNA specimens were shipped by the IBOs to Genexe&#8217;s parent company, Immerge, located in Colorado. A crucial step remained: obtaining a physician&#8217;s order, required for Medicare reimbursement. Genexe allegedly secured these orders <em>after</em> the samples were already collected, utilizing agreements established with telemedicine companies and medical laboratories. The government contends that kickbacks were paid to these telemedicine providers or their associated companies to induce them to sign the necessary orders. This practice flagrantly violates Medicare&#8217;s requirement that tests must be ordered by the beneficiary&#8217;s <em>treating physician</em> who uses the results in patient management. It mirrors patterns identified in numerous government fraud alerts and enforcement actions targeting telemedicine schemes where providers, often with little or no patient interaction, rubber-stamp orders for unnecessary items or services in exchange for payment. </li>



<li><strong>Laboratory Testing &; High-Value Billing:</strong> With both the specimen and a physician order in hand, Genexe forwarded the materials to a medical laboratory for testing. In some instances, the initial laboratory might have outsourced the actual testing to another lab. The performing laboratory then billed Medicare for the CGx or PGx test. The government noted that these tests were regularly reimbursed at rates exceeding $6,000 per test, making them highly lucrative targets for fraudulent billing. The significant reimbursement potential is often the primary driver behind such large-scale fraud schemes. </li>



<li><strong>Kickbacks from Labs Back to Genexe:</strong> The final alleged step involved the flow of money back to the scheme&#8217;s orchestrators. Once Medicare reimbursed the laboratory, Genexe allegedly received a percentage or portion of those Medicare funds from the laboratory. This payment represented an illegal kickback for Genexe having referred the profitable testing business (the completed swabs and prescriptions) to the lab. This completes the alleged cycle of kickbacks, ensuring the marketing entity directly profited from the downstream fraudulent Medicare billing it initiated. </li>
</ol>
</li>



<li><strong>Settlement Details</strong> The agreement reached between the defendants and the government includes several key components:
<ul class="wp-block-list">
<li><strong>Monetary Payment:</strong> Genexe, Immerge, Jason Green, and Jason Gross collectively agreed to pay $6 million to the United States. The specific contributions of each party are not typically detailed in public settlement announcements. The total settlement amount, while substantial, may reflect various factors beyond the total alleged fraudulent billing. Considerations often include the defendants&#8217; ability to pay (especially given that both Genexe and Immerge are defunct ), potential cooperation credits (though none were mentioned in this announcement, they are a factor in many FCA settlements ), and the government&#8217;s assessment of litigation risk versus the certainty of recovery through settlement. </li>



<li><strong>Scope of Resolution:</strong> The payment resolves the civil allegations brought by the USAO-EDPA under the False Claims Act and other statutes (implicitly including the Anti-Kickback Statute) related to the described genetic testing scheme during the specified timeframe. It does not typically resolve any potential criminal liability unless explicitly stated. </li>



<li><strong>Whistleblower (<em>Qui Tam</em>) Lawsuits:</strong> The settlement specifically resolves the claims asserted in two <em>qui tam</em> lawsuits filed by whistleblowers:
<ul class="wp-block-list">
<li><em>United States ex rel. Shimi v. Genexe, LLC, et al.</em>, No. 19-CV-3660 (E.D. Pa.)</li>



<li><em>United States ex rel. Covington v. Genexe, LLC, et al.</em>, No. 23-CV-2915 (E.D. Pa.) </li>
</ul>
</li>



<li><strong>Relator Share:</strong> As part of the resolution, the four individuals who brought these <em>qui tam</em> actions (the relators) will collectively receive approximately $1.3 million from the federal government&#8217;s $6 million recovery. This represents a relator share of about 21.7%, falling within the standard 15% to 25% range stipulated by the FCA for cases in which the government intervenes and prosecutes the action. </li>



<li><strong>Crucial Disclaimer:</strong> It is essential to reiterate the standard legal disclaimer included in the announcement: <strong>&#8220;The claims resolved by the settlement are allegations only and there has been no determination of civil liability&#8221;</strong>. This signifies that the settlement is a compromise of disputed claims and does not constitute an admission of fault or liability by Genexe, Immerge, Green, or Gross. </li>
</ul>
</li>



<li><strong>Official Statements (Contextualized)</strong> Statements from the involved government officials provide insight into the enforcement priorities and rationale:
<ul class="wp-block-list">
<li><strong>U.S. Attorney David Metcalf:</strong> His comments underscore the dual nature of the harm caused by such schemes: they &#8220;prey on the fears of patients&#8221; and simultaneously &#8220;waste taxpayer dollars by spending limited funds on medically unnecessary or nonexistent tests&#8221;. He further affirmed the government&#8217;s commitment to partnering with law enforcement to investigate fraud, waste, and abuse and utilizing &#8220;every tool available,&#8221; prominently including the False Claims Act, &#8220;to recover improperly paid taxpayer funds&#8221;. This highlights the focus on both patient protection and fiscal responsibility. </li>



<li><strong>HHS-OIG Special Agent in Charge Maureen Dixon:</strong> Her statement emphasizes the professional and ethical obligations of healthcare providers, stating they &#8220;should only order testing which would benefit individual patient care, not for personal gain&#8221;. She reinforced the ongoing commitment of HHS-OIG, alongside the U.S. Attorney&#8217;s Office and other partners, to &#8220;evaluate and pursue allegations of kickbacks resulting in medically unnecessary services&#8221;. This points to the critical link investigators draw between illegal financial incentives (kickbacks) and the provision of unnecessary care. </li>
</ul>
</li>



<li><strong>Government Personnel</strong> The announcement acknowledges the work of Assistant United States Attorney Mark J. Sherer and Auditor Denis J. Cooke in handling this matter for the USAO-EDPA. </li>
</ul>



<h2 class="wp-block-heading">Understanding the Legal Framework: False Claims Act and Anti-Kickback Statute</h2>



<p>The Genexe settlement hinges on allegations of violating two powerful federal laws designed to protect the integrity of federal healthcare programs: the False Claims Act (FCA) and the Anti-Kickback Statute (AKS). A clear understanding of these statutes is essential to grasp the gravity of the allegations and the broader context of healthcare fraud enforcement.</p>



<ul class="wp-block-list">
<li><strong>The False Claims Act (FCA) &#8211; The Government&#8217;s Primary Tool Against Fraud</strong>
<ul class="wp-block-list">
<li><strong>Purpose &; History:</strong> Enacted originally during the Civil War in 1863 to combat fraud by defense contractors, the FCA (codified at 31 U.S.C. §§ 3729-3733) serves as the federal government&#8217;s principal civil remedy to redress fraud against its agencies and programs, including Medicare and Medicaid. Its fundamental purpose is to protect the government—and by extension, taxpayers—from being overcharged, paying for substandard goods or services, or otherwise being financially defrauded. </li>



<li><strong>Core Prohibitions:</strong> The FCA imposes civil liability on any person or entity that:
<ul class="wp-block-list">
<li>Knowingly presents, or causes to be presented, a false or fraudulent claim for payment or approval to the U.S. government. </li>



<li>Knowingly makes, uses, or causes to be made or used, a false record or statement material to a false or fraudulent claim. </li>



<li>Conspires to commit a violation of the FCA. </li>



<li>Knowingly makes, uses, or causes to be made or used, a false record or statement material to an obligation to pay or transmit money or property to the government, or knowingly conceals or improperly avoids or decreases an obligation to pay or transmit money or property to the government (often called a &#8220;reverse false claim&#8221;). </li>
</ul>
</li>



<li><strong>The &#8220;Knowing&#8221; Standard (Scienter):</strong> A critical aspect of the FCA is its definition of &#8220;knowing&#8221; conduct. Liability does <em>not</em> require proof of specific intent to defraud the government. Instead, the statute defines &#8220;knowing&#8221; and &#8220;knowingly&#8221; to mean that a person, with respect to information:
<ol class="wp-block-list">
<li>Has actual knowledge of the information&#8217;s falsity;</li>



<li>Acts in deliberate ignorance of the truth or falsity of the information; or</li>



<li>Acts in reckless disregard of the truth or falsity of the information. This broad standard means that entities cannot avoid liability by simply ignoring warning signs or failing to implement reasonable diligence to ensure the accuracy of their claims. </li>
</ol>
</li>



<li><strong>Materiality:</strong> For a false statement or record to lead to FCA liability, the falsehood must be &#8220;material&#8221; to the government&#8217;s decision to pay the claim. The Supreme Court has clarified that the materiality standard generally looks to whether the falsehood has &#8220;a natural tendency to influence, or be capable of influencing, the payment or receipt of money or property.&#8221; </li>



<li><strong>Severe Penalties:</strong> Violations of the FCA carry substantial financial penalties designed for deterrence and recovery. A defendant found liable faces:
<ul class="wp-block-list">
<li><strong>Treble Damages:</strong> Three times the amount of damages the government sustains because of the false claim. </li>



<li><strong>Mandatory Civil Penalties:</strong> A per-claim penalty, adjusted annually for inflation. For violations occurring after November 2, 2015, and assessed after February 12, 2024, the penalty range is $13,946 to $27,894 <em>per false claim</em>. For earlier violations, the range was typically $5,500 to $11,000 per claim. Crucially, each individual bill or claim submitted to the government that is deemed false can trigger a separate penalty. In schemes involving numerous billings, these penalties can accumulate rapidly, often exceeding the treble damages amount. </li>
</ul>
</li>



<li><strong>Criminal Counterpart:</strong> There is also a criminal FCA statute (18 U.S.C. § 287) which can result in imprisonment and criminal fines for submitting false claims. </li>



<li><strong>Application in Healthcare:</strong> The FCA is heavily utilized in the healthcare sector to combat fraud against Medicare, Medicaid, TRICARE, and other government health programs. Common applications include billing for services not rendered, billing for medically unnecessary services (as alleged in the Genexe case), upcoding (billing for a more complex service than provided), providing substandard care, and submitting claims tainted by illegal kickbacks. </li>
</ul>
</li>



<li><strong>The Anti-Kickback Statute (AKS) &#8211; Protecting Medical Judgment from Improper Influence</strong>
<ul class="wp-block-list">
<li><strong>Purpose:</strong> The AKS (42 U.S.C. § 1320a-7b(b)) is a criminal statute designed to ensure that medical decisions are based on patients&#8217; best interests, not on improper financial incentives. Congress enacted it out of concern that kickbacks can corrupt medical judgment, leading to overutilization of services, increased program costs, patient steering to potentially inappropriate providers, unfair competition among providers, and potential patient harm. </li>



<li>**Core Prortly or covertly, in cash or in kind – to induce or reward any of the following involving items or services payable by a federal healthcare program:
<ul class="wp-block-list">
<li>Referring an individual for the furnishing or arranging for the furnishing of any item or service; or</li>



<li>Purchasing, leasing, ordering, or arranging for or recommending purchasing, leasing, or ordering any good, facility, service, or item. The statute applies to both sides of the transaction – those who pay/offer kickbacks and those who solicit/receive them. </li>
</ul>
</li>



<li><strong>Broad Definition of &#8220;Remuneration&#8221;:</strong> The term &#8220;remuneration&#8221; is interpreted extremely broadly by HHS-OIG and the courts to encompass anything of value. This includes not only direct payments like cash bribes or rebates, but also indirect benefits such as free or below-fair-market-value goods or services (like office space or equipment), excessive compensation for services (e.g., medical directorships, consulting fees), gifts, travel, entertainment, and waivers or reductions of patient cost-sharing obligations (copayments/deductibles), unless specific exceptions are met. </li>



<li><strong>Intent Standard (&#8220;Knowingly and Willfully&#8221;):</strong> Violation requires proof that the defendant acted &#8220;knowingly and willfully.&#8221; While this is a criminal intent standard, courts and HHS-OIG have interpreted &#8220;willfully&#8221; to mean acting with the knowledge that one&#8217;s conduct is unlawful, though specific knowledge of the AKS itself is not required. Crucially, the government often employs the &#8220;one purpose&#8221; test: if <em>any one purpose</em> of the remuneration is to induce or reward prohibited referrals or business, the AKS may be violated, even if the payment also serves other legitimate purposes. </li>



<li><strong>Severe Penalties:</strong> AKS violations carry significant criminal, civil, and administrative penalties:
<ul class="wp-block-list">
<li><strong>Criminal:</strong> Felony conviction punishable by up to 10 years in prison and/or fines up to $100,000 per violation. (Note: Some sources cite older penalty amounts like $25,000, but $100,000 is the current statutory maximum per 42 U.S.C. § 1320a-7b(b)). </li>



<li><strong>Civil Monetary Penalties (CMPs):</strong> Under the Civil Monetary Penalties Law (CMPL), HHS-OIG can impose CMPs of up to $50,000 per kickback violation, plus an assessment of up to three times the amount of the remuneration involved. (Note: Some sources cite older CMP amounts; $50,000 is a commonly cited figure for AKS-related CMPs, though specific CMP amounts can vary by violation type ). </li>



<li><strong>Exclusion:</strong> Conviction of an AKS violation can lead to mandatory exclusion from participation in all federal healthcare programs (Medicare, Medicaid, etc.). HHS-OIG also has permissive authority to exclude based on AKS violations even without a criminal conviction. </li>
</ul>
</li>



<li><strong>No Requirement for Patient Harm or Financial Loss:</strong> Importantly, the government does not need to prove that a kickback resulted in actual patient harm or financial loss to the programs to establish an AKS violation. The statute targets the corrupting influence of the kickback itself. Therefore, arguing that a service was medically necessary or properly performed is not a defense to an AKS charge if the referral for that service was induced by an illegal kickback. </li>



<li><strong>Safe Harbors:</strong> Recognizing that some commercially reasonable and beneficial arrangements could technically fall under the broad scope of the AKS, Congress directed HHS-OIG to create regulatory &#8220;safe harbors&#8221;. These safe harbors describe specific payment and business practices that are protected from AKS liability if all of their detailed requirements are strictly met. Examples include certain arrangements for employment, personal services and management contracts, space and equipment rentals, discounts, and practitioner recruitment, among many others. Compliance with a safe harbor is voluntary; however, arrangements that do not fit squarely within a safe harbor are subject to scrutiny on a case-by-case basis to determine if the requisite intent to induce referrals exists. </li>
</ul>
</li>



<li><strong>The Critical Interplay Between FCA and AKS</strong> The relationship between the FCA and the AKS was significantly strengthened by the Patient Protection and Affordable Care Act (ACA) in 2010. The ACA amended the AKS to explicitly state that &#8220;a claim that includes items or services resulting from a violation of constitutes a false or fraudulent claim for purposes of [the FCA]&#8221; (42 U.S.C. § 1320a-7b(g)). This amendment created a powerful link: proof of an illegal kickback arrangement under the AKS automatically renders any resulting claims submitted to federal healthcare programs false or fraudulent under the FCA. This <em>per se</em> falsity means the government (or a whistleblower) can establish FCA liability – triggering treble damages and per-claim penalties – by demonstrating an underlying AKS violation connected to the claims, without needing to separately prove the claims were false for other reasons (like lack of medical necessity, though that can be an independent basis for FCA liability). In the context of the Genexe settlement, this interplay is crucial. The government alleged <em>both</em> that the CGx/PGx tests were medically unnecessary (a direct basis for FCA liability) <em>and</em> that they were procured via kickbacks violating the AKS (an independent basis for FCA liability). This dual theory strengthens the government&#8217;s case and underscores the severe consequences when financial inducements taint healthcare services billed to federal programs. </li>



<li><strong>Comparative Overview: FCA vs. AKS</strong> To further clarify the distinct yet related roles of these statutes, the following table summarizes their key features:</li>
</ul>



<figure class="wp-block-table"><table class="has-fixed-layout"><tbody><tr><th>Feature</th><th>False Claims Act (Civil &#8211; 31 U.S.C. § 3729)</th><th>Anti-Kickback Statute (Criminal/Civil/Admin &#8211; 42 U.S.C. § 1320a-7b(b))</th></tr><tr><td><strong>Primary Purpose</strong></td><td>Protect government funds from false/fraudulent claims</td><td>Protect medical judgment &; patient welfare from corrupting influence of kickbacks</td></tr><tr><td><strong>Prohibited Conduct</strong></td><td>Knowingly submitting (or causing submission of) false/fraudulent claims; false records material to claims; reverse false claims; conspiracy</td><td>Knowingly &; willfully offering, paying, soliciting, or receiving remuneration to induce/reward federal healthcare program referrals/business</td></tr><tr><td><strong>Intent Standard</strong></td><td>&#8220;Knowing&#8221; = Actual knowledge, deliberate ignorance, or reckless disregard</td><td>&#8220;Knowing &; Willful&#8221; = Intent to do something unlawful (one purpose test often applied)</td></tr><tr><td><strong>Key Penalties</strong></td><td>Treble damages + mandatory per-claim penalties ($13,946-$27,894 post-2/12/24)</td><td>Felony conviction (up to 10 yrs prison, $100k fine); CMPs (up to $50k + 3x remuneration); Exclusion from federal programs</td></tr><tr><td><strong>Whistleblower Provision</strong></td><td>Yes (<em>Qui Tam</em> &#8211; 31 U.S.C. § 3730)</td><td>No direct provision, but AKS violations are basis for FCA <em>qui tam</em> suits</td></tr><tr><td><strong>Safe Harbors</strong></td><td>Not Applicable</td><td>Yes, specific regulatory exceptions meeting strict criteria</td></tr></tbody></table></figure>



<p></p>



<ul class="wp-block-list">
<li><strong>Broader Legal Context: The Spectrum of Intent</strong> It is also relevant to note how the intent standards of the FCA and AKS fit within the broader spectrum of healthcare fraud and abuse laws. For instance, the Physician Self-Referral Law (Stark Law), which prohibits physicians from referring Medicare/Medicaid patients for certain &#8220;designated health services&#8221; to entities with which they (or an immediate family member) have a financial relationship (unless an exception applies), is generally considered a &#8220;strict liability&#8221; statute. This means proof of specific intent to violate the Stark Law is not required; a violation can occur based simply on the existence of a prohibited financial relationship and referral, regardless of the parties&#8217; intentions. This contrasts sharply with the AKS, which requires proof of &#8220;knowing and willful&#8221; intent (albeit potentially satisfied by the &#8220;one purpose&#8221; test) , and the civil FCA, which requires proof of &#8220;knowing&#8221; conduct (actual knowledge, deliberate ignorance, or reckless disregard) but not specific intent to defraud. This range of intent standards means that healthcare organizations must design compliance programs capable of preventing and detecting a wide array of potential violations, from inadvertent billing errors that could meet the FCA&#8217;s &#8220;reckless disregard&#8221; standard, to technical Stark Law violations arising from complex financial arrangements, to deliberate kickback schemes violating the AKS. The Genexe case, focusing on alleged knowing submission of false claims and willful kickbacks, sits at the more intentional end of this spectrum. </li>
</ul>



<h2 class="wp-block-heading">The Science and the Scheme: CGx, PGx, and Medical Necessity Fraud</h2>



<p>The allegations against Genexe revolve around two specific types of advanced laboratory tests: Cancer Genomics (CGx) and Pharmacogenomics (PGx). Understanding what these tests are, when Medicare covers them, and how the alleged scheme circumvented these rules is crucial.</p>



<ul class="wp-block-list">
<li><strong>Explaining the Tests: CGx and PGx</strong>
<ul class="wp-block-list">
<li><strong>Definitions and Purpose:</strong>
<ul class="wp-block-list">
<li><strong>CGx (Cancer Genomics) Testing:</strong> This type of genetic testing analyzes a patient&#8217;s DNA to identify specific inherited mutations in genes that might indicate a higher risk of developing certain types of cancer in the future. It focuses on hereditary predispositions. </li>



<li><strong>PGx (Pharmacogenomics) Testing:</strong> This testing examines a patient&#8217;s genetic makeup to identify variations that can affect how their body responds to specific medications. The goal is to help predict potential adverse drug reactions, lack of efficacy, or the need for dosage adjustments, thereby optimizing drug therapy for safety and effectiveness. </li>
</ul>
</li>



<li><strong>Process:</strong> Both types of tests typically involve obtaining a DNA sample from the patient, often through a simple cheek (buccal) swab to collect saliva and cells. This sample, along with a requisition form containing patient and ordering provider information, is then sent to a specialized laboratory for analysis using techniques like Next Generation Sequencing (NGS). </li>
</ul>
</li>



<li><strong>Medicare&#8217;s Rules: Coverage and Medical Necessity</strong> Medicare coverage for any diagnostic test, including advanced genetic testing, is contingent upon meeting strict criteria, primarily centered around the concept of &#8220;medical necessity.&#8221;
<ul class="wp-block-list">
<li><strong>Fundamental Requirement: &#8220;Reasonable and Necessary&#8221;:</strong> The cornerstone of Medicare coverage is the statutory requirement that payment may only be made for items or services that are &#8220;reasonable and necessary for the diagnosis or treatment of illness or injury or to improve the functioning of a malformed body member&#8221; (Social Security Act, Title XVIII, Section 1862(a)(1)(A)). Tests performed solely for screening purposes (detecting disease or predisposition in asymptomatic individuals) are generally <em>not</em> covered by Medicare unless specifically mandated by Congress through legislation (e.g., certain cancer screenings like mammograms or colorectal cancer screening tests). </li>



<li><strong>Physician Order Requirement:</strong> Medicare regulations explicitly state that all diagnostic laboratory tests must be ordered by the physician (or other qualified non-physician practitioner) who is <em>treating</em> the beneficiary for a specific medical problem and who <em>uses the results</em> in the management of that beneficiary&#8217;s specific medical problem. Tests ordered by physicians not involved in the patient&#8217;s treatment, or tests whose results are not integrated into the patient&#8217;s care plan, are deemed not reasonable and necessary and are therefore not payable by Medicare. </li>



<li><strong>Specific Genetic Testing Criteria (NCDs/LCDs):</strong> Due to the complexity and evolving nature of genetic testing, the Centers for Medicare &; Medicaid Services (CMS) and its regional contractors (Medicare Administrative Contractors or MACs) have developed specific coverage policies. National Coverage Determinations (NCDs) apply nationwide, while Local Coverage Determinations (LCDs) provide guidance within specific MAC jurisdictions when an NCD doesn&#8217;t exist or needs further definition. These policies outline the precise clinical circumstances, patient criteria, and test requirements for coverage.
<ul class="wp-block-list">
<li><em><strong>CGx Coverage Examples (NCD 90.2):</strong></em> CMS NCD 90.2 provides coverage for Next Generation Sequencing (NGS) tests for Medicare beneficiaries with cancer under specific conditions. For <em>somatic</em> (tumor) testing, the patient must have recurrent, relapsed, refractory, metastatic, or advanced stage III or IV cancer, have decided to seek further treatment, and not have been previously tested with the same NGS test for the same genetic content. For <em>germline</em> (inherited) testing, the patient must have <em>any</em> cancer diagnosis, a clinical indication and risk factor for hereditary cancer, and no prior same-content germline NGS test. Critically, broad CGx testing for general cancer <em>screening</em> in patients without a cancer diagnosis or specific high-risk criteria outlined in NCDs/LCDs is generally not considered medically necessary by Medicare. </li>



<li><em><strong>PGx Coverage Examples (MolDX LCDs):</strong></em> Several MACs, particularly those participating in the Molecular Diagnostics (MolDX) program, have issued LCDs for PGx testing. Common requirements include: the patient must have a condition for which a specific drug therapy is being considered or is already in use; the drug must have a known gene-drug interaction recognized as clinically actionable (e.g., by the FDA label or Clinical Pharmacogenetics Implementation Consortium (CPIC) Level A or B guidelines); the test result must be necessary to directly impact the clinician&#8217;s decision-making regarding drug selection, dosage, or avoidance; and the test must be ordered by the treating clinician responsible for the patient&#8217;s pharmacologic management. PGx testing is explicitly <em>not</em> considered reasonable and necessary merely because a patient has a certain diagnosis or before non-genetic factors (like other medical conditions or medications) have been considered in drug selection. Furthermore, performing duplicative germline testing (re-testing the same genetic content) is not covered as it provides no new clinical information. </li>
</ul>
</li>



<li><strong>Documentation Requirements:</strong> Adequate documentation in the patient&#8217;s medical record is essential to support the medical necessity of any ordered test, including genetic tests. Laboratories submitting claims are expected to ensure they have reason to believe the tests are medically necessary and should be able to provide supporting documentation if requested by Medicare. This documentation should clearly link the test to the patient&#8217;s specific medical condition and the treating physician&#8217;s management plan. </li>
</ul>
</li>



<li><strong>How the Genexe Scheme Allegedly Circumvented the Rules</strong> The government&#8217;s allegations suggest the Genexe scheme systematically bypassed these fundamental Medicare rules:
<ul class="wp-block-list">
<li><strong>Bypassing the Treating Physician:</strong> The core of the alleged scheme involved using marketers (IBOs) to obtain specimens and then using unrelated telemedicine providers, allegedly paid kickbacks, to generate the necessary physician orders. These telemedicine providers were generally not the beneficiaries&#8217; treating physicians, had little or no prior relationship with the patients, and often conducted only brief (if any) consultations. This directly contravenes the explicit Medicare requirement that tests must be ordered by the physician treating the patient for a specific problem and using the results in management. </li>



<li><strong>Lack of Individualized Medical Necessity Assessment:</strong> By soliciting beneficiaries in non-clinical settings and obtaining physician orders through telemedicine encounters allegedly driven by kickbacks rather than clinical judgment, the scheme inherently lacked any meaningful, individualized assessment of medical necessity. The tests were allegedly ordered <em>en masse</em> based on the success of recruitment efforts, not based on whether each specific beneficiary met the stringent NCD or LCD criteria for CGx or PGx testing (e.g., having advanced cancer for somatic CGx, or needing a specific drug with an actionable gene interaction for PGx). This constitutes a failure to meet the &#8220;reasonable and necessary&#8221; standard. </li>



<li><strong>Targeting High Reimbursement Tests:</strong> The focus on CGx and PGx tests, noted by the government as being reimbursed at over 6,000each,suggeststheschemewasfinanciallymotivated,aimingtomaximizerevenuefromeachimproperlyprocuredtestbilledtoMedicare.[1]∗∗∗ExploitingComplexityandLabChallenges∗∗Theverycomplexitysurroundinggenetictestingcoveragecontributestothevulnerabilityexploitedbysuchschemes.NCDsandLCDsaredetailedandtechnical,makingitdifficultforbeneficiaries,andsometimesevennon−specialistproviders,tofullygraspwhentheseexpensivetestsaregenuinelyindicatedandcoveredbyMedicare.[6,7]Fraudsterscapitalizeonthiscomplexitythroughdeceptivemarketing,suchasoffering&#8221;free&#8221;tests,whichobscuresthefactthatMedicarewillonlypayifstrictcriteriaaremet,potentiallyleavingthebeneficiaryliableforthousandsofdollarsiftheclaimisdenied.[17,18,22]Theuseofintermediarieslikemarketersandnon−treatingtelemedicinephysiciansfurtherobfuscatestheprocessanddistancesthefraudulentorderingfromlegitimateclinicalworkflows.[1,26,31,32,33,38,40]Laboratoriesinvolvedinprocessingthesetestsfacesignificantcompliancechallenges.WhileHHS−OIGguidanceclarifiesthatlabscannotmakethefinalmedicalnecessitydetermination,italsostatesthatlabsshouldonlysubmitclaimsforservicestheyhavereasontobelievearemedicallynecessaryandshouldbepreparedtoprovidesupportingdocumentation.[129]InschemesliketheoneallegedagainstGenexe,labsreceiverequisitionformssignedbylicensedphysiciansobtainedviatelemedicine.Verifyingthelegitimacyoftheupstreamorderingprocessandthetruemedicalnecessityforeachtest,especiallywhendealingwithhighvolumesfrompotentiallyunknowntelemedicineproviders,canbedifficult.However,theallegationthatlabspaidkickbacks∗back∗toGenexesuggestspotentialcomplicityinthisspecificcase.[1]Regardlessofcomplicity,labsmustimplementrobustcompliancemeasures,includingscrutinizingorderingpatterns,verifyingprovidercredentials,andpotentiallyrequiringenhanceddocumentationfortestsorderedthroughlesstraditionalchannelsliketelemedicineplatformsassociatedwithmarketingentities,tomitigatetheirownFCAandAKSrisks.∗∗Section4:IndustryContext:TheRoleofMarketingandTelemedicineinHealthcareFraud∗∗TheGenexesettlementisnotanisolatedincidentbutratherreflectsbroadertrendswherelegitimatehealthcareindustrycomponents—marketingorganizationsandtelemedicineplatforms—havebeenco−optedandexploitedinfraudulentschemestargetingfederalhealthcareprograms.∗∗∗MarketingOrganizationsinHealthcare:ADouble−EdgedSword∗∗∗∗∗LegitimateRolesandBusinessModels:∗∗Healthcaremarketingorganizationsplayavalidandoftennecessaryroleinthemodernhealthcareecosystem.Theyhelpraiseawarenessaboutdiseases,treatments,andavailableservices;educatepatients;generateleadsforprovidersandhealthsystems;andfacilitateconnectionsbetweenpatientsandappropriatecare.[132,133,134]Businessmodelsvary,includingservice−basedapproachesfocusedonpatientacquisition(oftenmeasuredbyCustomerAcquisitionCost−CAC)andproduct−basedapproachesfocusedonmaximizingReturnonAdSpend(ROAS).[132]Buildingtrustandcommunicatingvaluearekeyfunctions.[134,135]Effectivemarketingconsidersthepatientjourney,frominitialawarenesstoresearchanddecision−making.[132]∗∗∗The&#8221;DarkSide&#8221;:FacilitatingFraudThroughKickbacks:∗∗Despitelegitimatefunctions,third−partymarketingorganizationshavefrequentlyemergedascentralfiguresinmajorhealthcarefraudenforcementactions.[1,19,24,26,27,30,31,32,33,34,35,36,38,39,40,41,42,77,82,131,136,137,138,139,140,141,142,143,144,145,146,147]Theseschemesofteninvolvethemarketersreceivingillegalkickbacksfromproviders,labs,orDMEcompaniesforgeneratingpatientreferralsorleads.Conversely,marketersmaypaykickbackstobeneficiaries(e.g.,through&#8221;free&#8221;offers)ortophysicians/telemedicinecompaniestosecureordersfortheproductsorservicestheyarepromoting.HHS−OIGhasissuedspecificSpecialFraudAlertswarningaboutsuspectmarketingarrangements,includingthoseinvolvingpaymentsbetweenMedicareAdvantageplans,providers,andmarketers.[30,69,139]Thestructureofteninvolvesaggressive,sometimesdeceptive,outreachtobeneficiaries,followedbysteeringthemtowardsspecific,oftenhigh−cost,servicesorproductssolelyforfinancialgain,inviolationoftheAKS.∗∗∗GenexeasaCaseStudy:∗∗TheallegationsagainstGenexeanditsparentImmergeplacethemsquarelywithinthisproblematiccontext.Genexe,operatedasamarketingarmofImmerge,allegedlybuiltabusinessmodelcenteredonpayingitsIBOnetworkkickbacks(/swab) to recruit Medicare beneficiaries for genetic tests. This structure incentivized volume over medical necessity, directly implicating the AKS. Immerge&#8217;s background as a general sales and marketing firm for diverse industries entering the complex, highly regulated healthcare space may illustrate a significant risk: applying standard, volume-driven sales tactics (like per-unit commissions) without adequate healthcare compliance expertise can lead directly to violations of laws like the AKS, resulting in substantial FCA liability. This underscores the critical need for any entity involved in healthcare marketing or lead generation, especially for federally reimbursed services, to invest heavily in specialized compliance knowledge and structures. It also highlights the due diligence burden on providers and labs when contracting with marketing partners. </li>
</ul>
</li>



<li><strong>Telemedicine&#8217;s Role and Vulnerabilities</strong>
<ul class="wp-block-list">
<li><strong>Benefits and Expansion:</strong> Telemedicine and telehealth have revolutionized healthcare delivery, dramatically expanding access to care, improving convenience for patients, and increasing operational efficiency for providers. The COVID-19 pandemic accelerated this adoption significantly. Various business models exist, including direct-to-consumer (DTC) platforms, business-to-business (B2B) solutions for healthcare organizations, hybrid models, and Platform-as-a-Service (PaaS) offerings. Technologies like AI, remote monitoring, and EHR integration continue to enhance telehealth capabilities. </li>



<li><strong>Exploitation in Fraud Schemes:</strong> Despite its benefits, the remote nature of telemedicine creates unique vulnerabilities that fraudsters have aggressively exploited. Common elements in fraudulent telemedicine schemes identified by DOJ and OIG include:
<ul class="wp-block-list">
<li><strong>Kickbacks for Orders:</strong> Telemedicine companies paying physicians or other practitioners (often recruited nationally and working as independent contractors) on a per-order or per-prescription basis, directly linking compensation to the volume of federally reimbursed items/services generated. </li>



<li><strong>Lack of Legitimate Provider-Patient Relationship:</strong> Providers ordering tests, DME, or medications for beneficiaries they have never met, spoken to, or only interacted with briefly via phone or a superficial platform review, without conducting a meaningful clinical assessment or establishing a valid treating relationship. This practice, sometimes referred to as &#8220;robo-signing&#8221; or involving &#8220;happy clickers,&#8221; directly undermines medical necessity requirements. </li>



<li><strong>Targeting Specific High-Cost Items:</strong> Schemes often focus narrowly on ordering specific categories of high-reimbursement items, such as orthotic braces (DME), genetic tests (CGx/PGx), or compounded prescription creams, rather than providing comprehensive care. This limits the practitioner&#8217;s clinical options and suggests the arrangement&#8217;s primary purpose is financial gain. </li>
</ul>
</li>



<li><strong>OIG/DOJ Enforcement Focus:</strong> Recognizing these risks, HHS-OIG issued a specific Special Fraud Alert in July 2022 cautioning practitioners about suspect telemedicine arrangements. This followed numerous large-scale DOJ enforcement actions, including &#8220;Operation Brace Yourself&#8221; (targeting DME/telemedicine fraud) , &#8220;Operation Double Helix&#8221; (targeting genetic testing/telemedicine fraud) , and others, collectively involving billions of dollars in alleged fraudulent claims. </li>



<li><strong>Genexe Connection:</strong> The alleged Genexe scheme fits this pattern precisely. Genexe purportedly contracted with telemedicine companies to obtain the necessary physician sign-offs for genetic tests solicited by its marketers, allegedly involving kickbacks to secure these orders from non-treating physicians. This highlights how telemedicine platforms can be misused as a crucial link in the chain of fraudulent billing, providing a veneer of legitimacy (a physician&#8217;s order) for services that lack genuine medical justification. </li>
</ul>
</li>



<li><strong>The Convergence of Risk Factors</strong> The Genexe case exemplifies a dangerous convergence of factors that create fertile ground for large-scale healthcare fraud. Aggressive, potentially deceptive marketing practices provide the mechanism for patient recruitment, often targeting vulnerable populations like Medicare beneficiaries. Telemedicine platforms, when misused, offer a way to bypass traditional clinical gatekeeping and obtain physician orders remotely, often without adequate patient assessment or establishment of medical necessity. Finally, the availability of high-reimbursement services, such as complex genetic tests or expensive DME , provides the substantial financial incentive that fuels these elaborate schemes. Federal enforcement agencies clearly recognize this convergence, leading to coordinated takedowns specifically targeting these interconnected elements. Consequently, effective compliance requires addressing risks at each stage: ensuring ethical marketing, validating legitimate telemedicine practices and provider-patient relationships, and rigorously verifying the medical necessity and appropriateness of the underlying service or item being billed. </li>
</ul>



<h2 class="wp-block-heading">The Bigger Picture: Nationwide Crackdown on Genetic Testing Fraud</h2>



<p>The $6 million Genexe settlement is a component of a much larger, ongoing federal effort to combat widespread fraud involving genetic testing, particularly targeting the Medicare program. This area has become a significant <a href="https://www.fraudswatch.com/covid-19-relief-fraud-the-case-of-casie-hynes-and-the-2-million-scheme-a-deep-dive-into-pandemic-loan-abuse/amp/" data-wpil-monitor-id="1424">enforcement priority for both the Department of Justice</a> (DOJ) and the HHS Office of Inspector General (HHS-OIG).</p>



<ul class="wp-block-list">
<li><strong>A Top Enforcement Priority</strong> Numerous government reports, press releases, and official statements confirm that fraud related to genetic testing (both CGx and PGx) is a major concern and a focal point for investigation and prosecution. It is frequently mentioned in nationwide enforcement sweeps and annual fraud reports. </li>



<li><strong>Scale of the Problem</strong> The financial magnitude of alleged genetic testing fraud is staggering. Key examples include:
<ul class="wp-block-list">
<li><strong>Operation Double Helix (2019):</strong> This landmark federal takedown resulted in charges against 35 individuals associated with telemedicine companies and CGx labs for allegedly fraudulent billing exceeding $2.1 billion. </li>



<li><strong>LabSolutions Case (2022 Sentence):</strong> The owner of LabSolutions LLC was sentenced to 27 years in prison for a scheme involving over $463 million in fraudulent claims for unnecessary genetic tests procured through kickbacks, with Medicare paying out over $187 million. </li>



<li><strong>Personalized Genomics Case (2019 Guilty Plea):</strong> The owner of Personalized Genetics LLC pleaded guilty in a scheme that billed Medicare over $127 million for CGx and PGx testing in just one year, resulting in reimbursements of approximately $60 million. </li>



<li><strong>OIG Data Brief (2021):</strong> An OIG analysis found that total Medicare Part B payments for genetic tests quadrupled from $351 million in 2016 to $1.41 billion in 2019, with significant increases in the number of labs billing, providers ordering, and tests per beneficiary, raising concerns about overuse and potential fraud. </li>



<li><strong>Ongoing Estimates:</strong> An HHS-OIG agent cited an estimate of $7 billion in genetic testing fraud from 2018 to early 2024, highlighting the persistent nature of the problem. </li>
</ul>
</li>



<li><strong>Common Scheme Elements (Reinforced)</strong> Across these numerous cases and government warnings, a consistent fraudulent model emerges, often involving the following steps:
<ol class="wp-block-list">
<li><strong>Deceptive Recruitment:</strong> Marketers or call centers target Medicare beneficiaries (often seniors or disabled individuals) using telemarketing, booths at events, health fairs, or door-to-door visits, offering &#8220;free&#8221; genetic tests (CGx or PGx). They often use scare tactics or misleading claims about preventing disease or improving medication safety to obtain the beneficiary&#8217;s Medicare information and a DNA sample (cheek swab). </li>



<li><strong>Kickbacks to Marketers:</strong> The marketing companies or individuals involved are often paid illegal kickbacks, frequently structured as a percentage of the eventual Medicare reimbursement or a flat fee per swab/referral obtained. </li>



<li><strong>Telemedicine Orders &; Kickbacks:</strong> The marketers then transmit the beneficiary information and specimen to entities that arrange for physician orders, typically through telemedicine platforms. Physicians or other practitioners, often having no prior relationship with the patient and conducting minimal or no consultation, sign the orders for the expensive genetic tests in exchange for kickbacks paid by the telemedicine company or marketers. These orders lack a basis in medical necessity. </li>



<li><strong>Laboratory Billing:</strong> The specimens and illicitly obtained orders are sent to participating laboratories, which perform the tests (or claim to) and submit high-dollar claims to Medicare for reimbursement. Sometimes labs are chosen based on higher reimbursement rates in certain geographic areas, even if they lack the capability to perform the tests themselves. </li>



<li><strong>Sharing the Proceeds:</strong> Once Medicare pays the claim, the laboratory shares the proceeds by paying kickbacks back to the marketers, telemedicine companies, and sometimes the ordering physicians, completing the fraudulent cycle. </li>
</ol>
</li>



<li><strong>Government Warnings and Resources</strong> In response to this pervasive fraud, federal agencies have issued numerous warnings and provided resources:
<ul class="wp-block-list">
<li><strong>HHS-OIG Fraud Alerts:</strong> OIG has published specific Fraud Alerts warning the public, particularly Medicare beneficiaries, about genetic testing scams, advising them to be suspicious of &#8220;free&#8221; offers, to protect their Medicare numbers, and to only get tests ordered by their trusted treating physician. </li>



<li><strong>Senior Medicare Patrol (SMP):</strong> This national program, funded by the Administration for Community Living, educates beneficiaries on how to prevent, detect, and report Medicare fraud, including genetic testing schemes. SMP resources often provide specific red flags and reporting guidance. </li>



<li><strong>CMS Healthcare <a href="https://www.fraudswatch.com/comprehensive-financial-fraud-prevention-detection/amp/" data-wpil-monitor-id="1426">Fraud Prevention</a> Partnership (HFPP):</strong> This public-private partnership has also addressed genetic testing fraud, issuing a white paper in 2020 outlining schemes and detection strategies. </li>
</ul>
</li>



<li><strong>Recent Enforcement Trends</strong> Beyond the large-scale takedowns focused on the marketing/telemedicine/lab kickback model, enforcement trends in the genetic testing space are evolving:
<ul class="wp-block-list">
<li><strong>Scrutiny of Sponsored Testing Programs:</strong> The government is increasingly examining arrangements where pharmaceutical or device manufacturers sponsor &#8220;free&#8221; genetic testing programs related to their products. While potentially beneficial for identifying patients with rare diseases, these programs carry AKS risks if they function as disguised kickbacks to induce prescriptions of the sponsor&#8217;s drug. OIG Advisory Opinions 22-06 and 24-12 provide guidance on structuring compliant programs, emphasizing safeguards against overutilization, ensuring tests don&#8217;t dictate prescribing decisions, and preventing the program from being used as a marketing tool. Recent multi-million dollar settlements (e.g., Ultragenyx $6M , QOL Medical $47M ) and ongoing investigations (e.g., BioMarin subpoena ) signal this is a key area of focus. The government scrutinizes whether test results are shared with sales teams or if eligibility criteria are sufficiently objective. </li>



<li><strong>Leveraging Data Analytics:</strong> DOJ, OIG, and CMS are investing heavily in advanced data analytics, including <a href="https://www.fraudswatch.com/google-ai-secrets-at-risk-linwei-ding-faces-14-counts-of-espionage-and-trade-secret-theft-in-china-scheme/amp/" data-wpil-monitor-id="1427">artificial intelligence</a> (AI) and machine learning (ML), to proactively identify potential fraud. These tools analyze vast amounts of claims data to detect aberrant billing patterns, statistical outliers, and suspicious relationships between providers, labs, and marketers, enabling investigators to target high-risk areas like genetic testing and telehealth more effectively. This shift towards data-driven enforcement means providers with unusual billing practices are more likely to face scrutiny, even without a whistleblower complaint. </li>
</ul>
</li>



<li><strong>Multi-Faceted Enforcement and Adaptability of Fraud</strong> The government&#8217;s approach to combating genetic testing fraud is multi-pronged, involving not just criminal prosecutions and civil settlements under the FCA/AKS, but also proactive measures like public education via fraud alerts , administrative actions by CMS (such as payment suspensions or provider enrollment revocations) often taken concurrently with law enforcement actions , and the aforementioned use of data analytics for early detection. This comprehensive strategy aims to disrupt schemes early, recover stolen funds, punish wrongdoers, and deter future fraud. However, the underlying structure of many of these fraud schemes – involving aggressive marketing, kickbacks, and the misuse of telemedicine to generate orders for high-value services – is highly adaptable. While genetic testing is a current focus due to its complexity and high reimbursement rates, the same model has been applied to durable medical equipment (DME), particularly orthotic braces (as seen in Operation Brace Yourself ), compounded creams , and other laboratory tests. As enforcement pressure mounts on genetic testing, it is likely that fraudulent actors will pivot to exploit other services or items using similar tactics. This necessitates a compliance approach focused on the <em>methods</em> of fraud (kickbacks, lack of medical necessity, improper use of marketing and telemedicine) rather than solely on specific <em>types</em> of services. </li>
</ul>



<h2 class="wp-block-heading">The Whistleblower&#8217;s Role: Uncovering Fraud Through Qui Tam Lawsuits</h2>



<p>The Genexe settlement, like a significant portion of healthcare fraud recoveries, originated from lawsuits filed by private individuals known as whistleblowers or <em>qui tam</em> relators. The False Claims Act&#8217;s <em>qui tam</em> provisions are a cornerstone of the government&#8217;s anti-fraud efforts, creating a powerful mechanism for uncovering misconduct that might otherwise remain hidden.</p>



<ul class="wp-block-list">
<li><strong>Introduction to <em>Qui Tam</em> Lawsuits</strong> The term <em>qui tam</em> is derived from the Latin phrase &#8220;qui tam pro domino rege quam pro se ipso in hac parte sequitur,&#8221; meaning &#8220;he who brings an action for the king as well as for himself&#8221;. The FCA allows private citizens (relators) who have knowledge of fraud against the government to file a civil lawsuit on behalf of the United States. The relator does not need to have suffered personal harm from the fraud. If the lawsuit is successful in recovering government funds, the relator is entitled to receive a share of the recovery as a reward. </li>



<li><strong>The <em>Qui Tam</em> Process</strong> Filing and pursuing a <em>qui tam</em> lawsuit under the FCA involves specific procedural steps mandated by the statute:
<ol class="wp-block-list">
<li><strong>Filing Under Seal:</strong> The relator, who must be represented by an attorney , files the complaint in federal district court <em>under seal</em>. This means the lawsuit is kept confidential – it is not served on the defendant, and its existence is not made public. Only the relator, their counsel, the assigned judge, and the government are initially aware of the filing. </li>



<li><strong>Service on the Government &; Disclosure:</strong> Concurrently with filing, the relator must serve a copy of the complaint and a separate &#8220;written disclosure of substantially all material evidence and information&#8221; they possess regarding the alleged fraud upon both the U.S. Attorney General in Washington, D.C., and the U.S. Attorney for the district where the case is filed. This disclosure provides the government with the factual basis for the allegations. </li>



<li><strong>Government Investigation Period:</strong> The FCA grants the government an initial 60-day period (from the date of service and disclosure) during which the case remains under seal while the DOJ investigates the relator&#8217;s allegations. The government frequently requests, and courts typically grant, extensions of this seal period, often for months or even years, particularly in complex cases, upon showing &#8220;good cause&#8221; (e.g., the need for further investigation). During this time, the government may use tools like Civil Investigative Demands (CIDs) to gather evidence. </li>



<li><strong>Intervention Decision:</strong> At the conclusion of its investigation (or the seal period), the government must notify the court whether it will &#8220;intervene&#8221; in the case.
<ul class="wp-block-list">
<li><strong>Intervention:</strong> If the government intervenes, it assumes primary responsibility for prosecuting the lawsuit. The relator remains a party to the action but typically plays a supporting role, although they have rights to participate and object to dismissal or settlement. The government intervenes in a minority of cases (historically around 20-25%). </li>



<li><strong>Declination:</strong> If the government declines to intervene, the relator has the right to pursue the lawsuit independently on behalf of the United States. The government can still monitor the case, potentially receive a share of any recovery, and must consent to dismissal. The government also retains the right to intervene later upon showing good cause. </li>



<li><strong>Dismissal/Settlement:</strong> The government may also seek to dismiss the case or settle it during the seal period. </li>
</ul>
</li>



<li><strong>Unsealing and Litigation:</strong> Once the government makes its intervention decision, the complaint is typically unsealed, and the case becomes public record. The relator (or the government, if intervening) then serves the complaint on the defendant(s), and the litigation proceeds according to the Federal Rules of Civil Procedure, potentially involving discovery, motions, settlement negotiations, or trial. </li>
</ol>
</li>



<li><strong>The Relator&#8217;s Share: Incentivizing Whistleblowing</strong> A key driver of the <em>qui tam</em> system is the financial reward offered to successful relators:
<ul class="wp-block-list">
<li><strong>Percentage Range:</strong> The FCA mandates a relator share based on the government&#8217;s recovery:
<ul class="wp-block-list">
<li><strong>Government Intervention:</strong> If the government intervenes, the relator receives between <strong>15% and 25%</strong> of the proceeds recovered. The minimum 15% is often considered a &#8220;finder&#8217;s fee&#8221; for bringing the case. </li>



<li><strong>Government Declination:</strong> If the government declines intervention and the relator successfully prosecutes the case alone, the relator receives a higher share, between <strong>25% and 30%</strong> of the proceeds. </li>
</ul>
</li>



<li><strong>Factors Influencing Share:</strong> The exact percentage within these ranges is typically negotiated between the relator&#8217;s counsel and the DOJ, or determined by the court if they cannot agree. Factors influencing the share include: the significance of the information provided by the relator; the relator&#8217;s contribution to the investigation and prosecution (including assistance from counsel); whether the relator reported promptly or attempted to stop the fraud internally; the extent of the relator&#8217;s knowledge; and whether the government learned of the fraud independently. In practice, shares in intervened cases often fall between 18-22%. </li>



<li><strong>Potential Reductions:</strong> The court may reduce the relator&#8217;s share, potentially below the standard minimums (e.g., to no more than 10% if based primarily on public information, unless the relator is an &#8220;original source&#8221;) or even eliminate it entirely if the relator &#8220;planned and initiated&#8221; the underlying fraud or is criminally convicted for their role in the fraud. </li>



<li><strong>Genexe Example:</strong> The approximately $1.3 million awarded to the four relators in the Genexe case from the $6 million settlement (around 21.7%) serves as a real-world example of a relator share determination within the 15-25% range for an intervened case. </li>
</ul>
</li>



<li><strong>The Importance of Whistleblowers in Combating Healthcare Fraud</strong> The <em>qui tam</em> mechanism is widely recognized as essential to the government&#8217;s success in fighting healthcare fraud:
<ul class="wp-block-list">
<li><strong>Uncovering Hidden Fraud:</strong> Whistleblowers, often current or former employees, contractors, or competitors, possess insider knowledge of complex fraudulent schemes that government auditors or investigators might never discover on their own. They provide the crucial initial information and often critical evidence needed to build a case. </li>



<li><strong>Driving Significant Recoveries:</strong> A substantial majority of FCA recoveries, particularly in the healthcare sector, stem from cases initiated by whistleblowers. Billions of dollars are returned to federal programs like Medicare and Medicaid each year thanks to <em>qui tam</em> actions. Since the FCA amendments in 1986 strengthened the <em>qui tam</em> provisions, whistleblower cases have led to the recovery of over $46.5 billion through FY 2020 alone , with total FCA recoveries (including government-initiated cases) exceeding $78 billion since 1986. </li>



<li><strong>Protecting Patients:</strong> Beyond financial recoveries, healthcare whistleblowers play a vital role in protecting patient safety and welfare. By exposing schemes involving medically unnecessary procedures or tests (like the genetic tests in the Genexe case), substandard care, or dangerous prescribing practices, they help stop practices that can directly harm vulnerable patients. </li>
</ul>
</li>



<li><strong>Whistleblower Protections</strong> Recognizing the personal and professional risks whistleblowers often take, the FCA includes anti-retaliation provisions. These protect employees, contractors, and agents from being discharged, demoted, suspended, threatened, harassed, or otherwise discriminated against in their employment because of lawful actions taken in furtherance of an FCA case (e.g., investigating, reporting, filing, or testifying). Relators who suffer retaliation can file a separate lawsuit seeking remedies such as reinstatement, double back pay with interest, compensation for special damages (like emotional distress), and attorney&#8217;s fees and costs. </li>



<li><strong>The Public-Private Partnership and Reporting Incentives</strong> The <em>qui tam</em> system functions as a unique and highly effective public-private partnership. The government essentially outsources a significant portion of its <a href="https://www.fraudswatch.com/who-is-legally-responsible-for-credit-card-scam/amp/" data-wpil-monitor-id="1428">fraud</a> detection and initial investigation efforts to private citizens and their legal counsel, incentivized by the potential for a substantial financial reward. This model dramatically expands the government&#8217;s enforcement reach far beyond what would be possible with its own limited resources. The structure of the FCA, particularly the &#8220;first-to-file&#8221; rule , which generally bars subsequent lawsuits based on the same facts as an earlier-filed case, creates a powerful incentive for whistleblowers to report fraud promptly. Delaying reporting carries the risk that another individual with the same information might file first, potentially precluding the later filer from pursuing the case or receiving a reward. This encourages timely disclosure, allowing the government to intervene sooner and potentially mitigate ongoing financial losses and patient harm. The continued success and high volume of <em>qui tam</em> filings underscore the vital role of these provisions, despite periodic legal challenges to their constitutionality. </li>
</ul>



<h2 class="wp-block-heading">Conclusion: Lessons from Genexe and the Path Forward for Compliance</h2>



<p>The $6 million settlement involving Genexe, Immerge, and its executives serves as a potent reminder of the significant legal and financial risks associated with non-compliance in the complex U.S. healthcare system. Resolving allegations that the companies violated the False Claims Act and Anti-Kickback Statute through a scheme involving medically unnecessary genetic tests procured via kickbacks paid to marketers and telemedicine providers, the case offers critical lessons for various stakeholders in the healthcare industry.<sup></sup>  ;</p>



<ul class="wp-block-list">
<li><strong>Recap of the Genexe Settlement</strong> Genexe, LLC, its parent Immerge, Inc., CEO Jason Green, and COO Jason Gross agreed to pay $6 million to resolve federal allegations. The government contended that between mid-2018 and late 2019, the defendants orchestrated a scheme where marketers (IBOs) were paid kickbacks to recruit Medicare beneficiaries for CGx and PGx tests. Telemedicine providers, also allegedly receiving kickbacks, then provided physician orders for these tests, which lacked medical necessity. The resulting claims submitted to Medicare were deemed false under the FCA, both due to the lack of medical necessity and the underlying AKS violations. Genexe also allegedly received kickbacks from the laboratories processing the tests. The settlement resolved these allegations, which were initially brought forward in two separate <em>qui tam</em> lawsuits filed by whistleblowers who collectively received approximately $1.3 million of the recovery. </li>



<li><strong>Key Takeaways from the Case</strong> Several crucial points emerge from this settlement:
<ul class="wp-block-list">
<li><strong>Marketing Entities Under Scrutiny:</strong> Companies functioning primarily as marketing or lead generation operations within the healthcare space, along with their leadership, are clearly subject to intense scrutiny and potential liability under fraud and abuse laws. Business models relying on payments tied to referrals are inherently risky. </li>



<li><strong>Telemedicine and Genetic Testing Vulnerabilities:</strong> The case highlights the continued exploitation of telemedicine platforms to bypass proper clinical oversight and the targeting of high-reimbursement services like genetic testing as vehicles for large-scale fraud. </li>



<li><strong>Dual Compliance Focus (FCA &; AKS):</strong> Adherence to <em>both</em> the FCA&#8217;s requirements (truthful claims, documented medical necessity) and the AKS&#8217;s prohibition on improper remuneration is essential. Violating one often leads to violations of the other. </li>



<li><strong>Whistleblower Impact:</strong> The resolution underscores the continuing effectiveness of the FCA&#8217;s <em>qui tam</em> provisions in enabling private individuals to expose significant fraud. </li>
</ul>
</li>



<li><strong>Broader Implications and Compliance Imperatives</strong> The Genexe case and the broader enforcement trends discussed offer critical compliance guidance for various healthcare industry participants:
<ul class="wp-block-list">
<li><strong>For Laboratories:</strong> Robust compliance programs are essential. Labs must implement procedures to carefully scrutinize incoming test orders, particularly high volumes originating from unfamiliar telemedicine sources or entities known to be associated with marketing campaigns. They need mechanisms to verify ordering provider credentials and, where possible, assess the plausibility of medical necessity based on available information and NCD/LCD criteria. Maintaining clear documentation trails and avoiding any financial arrangements with referral sources that could be construed as kickbacks (including payments <em>from</em> the lab <em>to</em> marketers or referring entities) is paramount. </li>



<li><strong>For Physicians and Other Ordering Practitioners:</strong> Strict adherence to clinical standards and Medicare&#8217;s &#8220;reasonable and necessary&#8221; requirements is non-negotiable. Providers must establish a legitimate treating relationship with patients before ordering tests and ensure the tests are appropriate for the patient&#8217;s specific condition and will be used in their medical management. Engaging in arrangements with telemedicine or marketing companies that involve compensation based on the volume of orders generated, or that pressure providers to order specific items without independent clinical judgment, carries extreme risk under the AKS and FCA. </li>



<li><strong>For Marketing and Telemedicine Companies:</strong> Entities operating in these spaces within healthcare must prioritize compliance with the AKS and FCA above aggressive sales tactics. Paying or receiving compensation tied directly or indirectly to the volume or value of referrals or business generated for federal healthcare programs is prohibited. Telemedicine encounters must meet established clinical and ethical standards, ensuring a valid provider-patient relationship is formed and documented. Business arrangements should be carefully structured, ideally seeking guidance from experienced healthcare counsel to ensure compliance, potentially utilizing AKS safe harbors where applicable. Companies entering healthcare from other industries must recognize its unique regulatory environment and invest in specialized compliance infrastructure. </li>



<li><strong>Universal Need for Robust Compliance:</strong> Across the board, healthcare organizations must invest in and maintain effective compliance programs. This includes conducting regular risk assessments tailored to their specific operations, implementing clear policies and procedures, providing ongoing staff training, performing regular audits and monitoring, establishing confidential channels for internal reporting of potential issues, and conducting thorough due diligence on all third-party vendors and partners, especially those involved in marketing, billing, or clinical service delivery. </li>
</ul>
</li>



<li><strong>Government Commitment and Future Outlook</strong> The Genexe settlement reinforces the unwavering commitment of the DOJ and HHS-OIG to combatting fraud, waste, and abuse within federal healthcare programs. Agencies continue to refine their strategies, employing powerful legal tools like the FCA and AKS, leveraging sophisticated data analytics for proactive detection , and relying heavily on the crucial information provided by whistleblowers through the <em>qui tam</em> process. As healthcare delivery models evolve, particularly with the growth of telemedicine and advanced diagnostics like genetic testing, enforcement efforts will adapt to address emerging fraud schemes. Navigating the complex web of healthcare regulations demands constant vigilance and a proactive commitment to ethical conduct and compliance. Settlements like the one involving Genexe underscore the severe financial and reputational consequences of failure. This report, by dissecting the case and its context, aims to provide valuable insights for organizations seeking to understand these critical issues and fortify their own compliance postures in an environment of persistent enforcement scrutiny.</li>
</ul>



<h2 class="wp-block-heading">Contact Information</h2>



<p>For media inquiries or further information regarding this report, please contact: Assistant United States Attorney Mark J. Sherer and Auditor Denis J. Cooke.</p>



<p><a href="mailto:USAPAE.PressBox@usdoj.gov">USAPAE.PressBox@usdoj.gov</a></p>



<p> 215-861-8300 </p>



<p></p>