Genexe, Immerge, and Executives Pay $6 Million to Settle Medicare Fraud Allegations Over Unnecessary Genetic Testing and Kickbacks

FraudsWatch.com
Genexe, Immerge, and executives settle False Claims Act allegations for $6 million over fraudulent genetic testing and kickback schemes targeting Medicare.

&NewLine;<p><strong>Settlement Resolves False Claims Act and Anti-Kickback Statute Allegations Involving CGx&sol;PGx Tests Procured Through Marketing and Telemedicine Scheme<&sol;strong><&sol;p>&NewLine;&NewLine;&NewLine;&NewLine;<p><strong>Introduction<&sol;strong><&sol;p>&NewLine;&NewLine;&NewLine;&NewLine;<p>The landscape of federal healthcare fraud enforcement saw another significant development as Genexe&comma; LLC&comma; its parent company Immerge&comma; Inc&period;&comma; Chief Executive Officer Jason Green&comma; and Chief Operating Officer Jason Gross agreed to pay &dollar;6 million to the United States government&period; This settlement&comma; announced by the U&period;S&period; Attorney&&num;8217&semi;s Office for the Eastern District of Pennsylvania&comma; resolves serious allegations that the companies and their executives violated the federal False Claims Act &lpar;FCA&rpar; and the Anti-Kickback Statute &lpar;AKS&rpar;&period;<sup><&sol;sup> At the heart of the government&&num;8217&semi;s claims lies a complex scheme alleged to have occurred between July 2018 and December 2019&comma; designed to fraudulently induce Medicare payments for medically unnecessary genetic tests – specifically&comma; cancer genomic &lpar;CGx&rpar; and pharmacogenomic &lpar;PGx&rpar; tests – which were purportedly procured through a web of illegal kickbacks involving marketing agents and telemedicine providers&period;<sup><&sol;sup> &nbsp&semi;<&sol;p>&NewLine;&NewLine;&NewLine;&NewLine;<p>This resolution arrives amidst a period of intensified federal scrutiny directed at sophisticated healthcare fraud operations&comma; particularly those exploiting the burgeoning fields of genetic testing and telemedicine&period; The government&&num;8217&semi;s pursuit of not only the operating subsidiary &lpar;Genexe&rpar; but also its parent corporation &lpar;Immerge&rpar; and the individuals leading them &lpar;Green and Gross&rpar; underscores a commitment to holding all responsible parties accountable when federal healthcare programs like Medicare are targeted for <a class&equals;"wpil&lowbar;keyword&lowbar;link" href&equals;"https&colon;&sol;&sol;www&period;fraudswatch&period;com&sol;tag&sol;financial-fraud&sol;" title&equals;"financial" data-wpil-keyword-link&equals;"linked" data-wpil-monitor-id&equals;"1429">financial<&sol;a> gain&period;<sup><&sol;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&period; This report will provide a comprehensive analysis of the Genexe settlement&comma; dissect the mechanics of the alleged fraudulent scheme&comma; delve into the critical legal statutes underpinning the government&&num;8217&semi;s case &lpar;the FCA and AKS&rpar;&comma; examine how genetic testing and telemedicine were allegedly manipulated&comma; place this case within the context of broader industry enforcement trends&comma; and explore the indispensable role of whistleblowers in bringing such alleged misconduct to light&period; &nbsp&semi;<&sol;p>&NewLine;&NewLine;&NewLine;&NewLine;<p><&sol;p>&NewLine;&NewLine;&NewLine;&NewLine;<h2 id&equals;"the-genexe-settlement-unpacking-the-6-million-resolution" class&equals;"rb-heading-index-0-105404 wp-block-heading">The Genexe Settlement&colon; Unpacking the &dollar;6 Million Resolution<&sol;h2>&NewLine;&NewLine;&NewLine;&NewLine;<p>Understanding the intricacies of this settlement requires identifying the key players&comma; the specific legal violations alleged&comma; the mechanics of the purported scheme&comma; and the precise terms of the resolution&period;<&sol;p>&NewLine;&NewLine;&NewLine;&NewLine;<ul class&equals;"wp-block-list">&NewLine;<li><strong>Parties Involved<&sol;strong>&NewLine;<ul class&equals;"wp-block-list">&NewLine;<li><strong>Genexe&comma; LLC &lpar;dba Genexe Health&rpar;&colon;<&sol;strong> Identified as a Delaware limited liability company with its principal address formerly in Greenwood Village&comma; Colorado&comma; Genexe marketed itself aggressively as a &&num;8220&semi;one-stop shop&&num;8221&semi; for genetic and pharmacogenetic profiling&period; It claimed involvement in all stages&comma; from patient screening and sample collection to laboratory processing&period; Genexe conducted business within the Eastern District of Pennsylvania&comma; among other locations&comma; but is confirmed to be no longer operational&period;  <&sol;li>&NewLine;&NewLine;&NewLine;&NewLine;<li><strong>Immerge&comma; Inc&period; &lpar;aka Immerge LLC&rpar;&colon;<&sol;strong> This entity&comma; incorporated in both Colorado and Delaware and also based in Greenwood Village&comma; Colorado&comma; controlled Genexe and served as its parent company&period; Immerge publicly positioned itself as a leading outsourced sales and marketing firm providing solutions to major corporations in diverse sectors like Energy&comma; Telecom&comma; Wireless&comma; and Solar&period; It operated Genexe specifically as one of its marketing ventures&period; Like Genexe&comma; Immerge is no longer operating&period; The involvement of a general marketing firm operating a specialized healthcare marketing arm highlights a potential risk area where standard&comma; aggressive sales tactics might be applied without sufficient understanding or implementation of healthcare&&num;8217&semi;s unique and stringent compliance rules&comma; particularly the AKS&period;  <&sol;li>&NewLine;&NewLine;&NewLine;&NewLine;<li><strong>Jason Green &amp&semi; Jason Gross&colon;<&sol;strong> These individuals held key leadership positions as Chief Executive Officer and Chief Operating Officer&comma; respectively&comma; for both Genexe and Immerge&period; Significantly&comma; they also possessed ownership interests in both companies&comma; placing them in positions of direct control and financial interest regarding the companies&&num;8217&semi; operations and alleged conduct&period; The government&&num;8217&semi;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&comma; especially when executives are alleged to have been personally involved or had direct oversight&period;  <&sol;li>&NewLine;&NewLine;&NewLine;&NewLine;<li><strong>Government Agencies&colon;<&sol;strong> The investigation and resolution were spearheaded by the U&period;S&period; Attorney&&num;8217&semi;s Office for the Eastern District of Pennsylvania &lpar;USAO-EDPA&rpar;&comma; working in collaboration with the U&period;S&period; Department of Health and Human Services&comma; Office of Inspector General &lpar;HHS-OIG&rpar;&period; This partnership is typical in major healthcare fraud cases&comma; combining prosecutorial authority with specialized investigative expertise in healthcare programs&period;  <&sol;li>&NewLine;&NewLine;&NewLine;&NewLine;<li><strong>Whistleblowers &lpar;Relators&rpar;&colon;<&sol;strong> The settlement explicitly resolves claims originally brought forth by private individuals who filed lawsuits under the <em>qui tam<&sol;em> provisions of the False Claims Act&period; These provisions empower citizens with knowledge of fraud against the government to sue on its behalf&period;  <&sol;li>&NewLine;<&sol;ul>&NewLine;<&sol;li>&NewLine;&NewLine;&NewLine;&NewLine;<li><strong>The Core Allegations<&sol;strong> The government&&num;8217&semi;s case against Genexe&comma; Immerge&comma; Green&comma; and Gross centered on alleged violations of two cornerstone federal statutes governing healthcare transactions and billing&colon;&NewLine;<ul class&equals;"wp-block-list">&NewLine;<li><strong>False Claims Act &lpar;FCA&rpar; Violations&colon;<&sol;strong> The United States contended that the defendants <em>knowingly<&sol;em> and <em>improperly<&sol;em> caused the submission of false claims to the Medicare program&period; The core of this allegation was that the CGx and PGx tests billed to Medicare were not &&num;8220&semi;reasonable and necessary&&num;8221&semi; for the diagnosis or treatment of the beneficiaries who received them&comma; a fundamental requirement for Medicare coverage&period; Submitting claims for services that fail to meet this medical necessity standard is a direct violation of the FCA&period;  <&sol;li>&NewLine;&NewLine;&NewLine;&NewLine;<li><strong>Anti-Kickback Statute &lpar;AKS&rpar; Violations&colon;<&sol;strong> Compounding the FCA allegations&comma; the government asserted that the genetic tests were procured through illegal kickbacks&comma; rendering the subsequent claims submitted to Medicare false as a matter of law&period; The alleged kickback arrangements were multifaceted&colon;&NewLine;<ol class&equals;"wp-block-list">&NewLine;<li>Genexe&sol;Immerge allegedly paid remuneration to independent marketers&comma; referred to as Independent Business Owners &lpar;IBOs&rpar;&comma; for recruiting Medicare beneficiaries and collecting their DNA specimens&period;  <&sol;li>&NewLine;&NewLine;&NewLine;&NewLine;<li>Genexe&sol;Immerge allegedly paid remuneration to telemedicine providers or the companies employing them to secure the required physician orders for the tests&period;  <&sol;li>&NewLine;&NewLine;&NewLine;&NewLine;<li>Genexe&sol;Immerge allegedly <em>received<&sol;em> remuneration back from the medical laboratories that performed the tests and billed Medicare&comma; in exchange for steering the lucrative testing business their way&period; This complex web of alleged payments&comma; designed to induce referrals and orders at multiple stages&comma; falls squarely within the conduct prohibited by the AKS&period; The link between AKS violations and FCA liability is direct&colon; the Affordable Care Act established that claims submitted to federal healthcare programs that include items or services resulting from an AKS violation are&comma; by definition&comma; false claims under the FCA&period; Thus&comma; the government alleged the claims were false both due to lack of medical necessity and because they were tainted by illegal kickbacks&period;  <&sol;li>&NewLine;<&sol;ol>&NewLine;<&sol;li>&NewLine;&NewLine;&NewLine;&NewLine;<li><strong>Timeline of Alleged Conduct&colon;<&sol;strong> The government focused its allegations on the period from approximately July 2018 through December 2019&period;  <&sol;li>&NewLine;<&sol;ul>&NewLine;<&sol;li>&NewLine;&NewLine;&NewLine;&NewLine;<li><strong>Dissecting the Alleged Fraudulent Scheme &lpar;Step-by-Step&rpar;<&sol;strong> Based on the government&&num;8217&semi;s contentions outlined in the settlement announcement&comma; the alleged scheme operated through a coordinated&comma; multi-stage process&colon;&NewLine;<ol class&equals;"wp-block-list">&NewLine;<li><strong>Aggressive Marketing &amp&semi; Recruitment&colon;<&sol;strong> Genexe initiated marketing campaigns promoting purportedly &&num;8220&semi;free&&num;8221&semi; CGx and PGx genetic tests&comma; specifically targeting Medicare beneficiaries&period; This approach immediately raises red flags&comma; as &&num;8220&semi;free&&num;8221&semi; offers are frequently used by fraudsters to lure beneficiaries into schemes involving unnecessary services ultimately billed to Medicare&period; Genexe employed a network of IBOs to act as field recruiters&period;  <&sol;li>&NewLine;&NewLine;&NewLine;&NewLine;<li><strong>Specimen Collection &amp&semi; IBO Kickbacks&colon;<&sol;strong> These IBOs&comma; characterized as independent contractors often lacking any medical background&comma; were tasked with collecting DNA samples &lpar;typically via cheek swabs&rpar; from beneficiaries&period; Critically&comma; this collection often occurred in non-clinical environments such as retail stores&comma; shopping malls&comma; health fairs&comma; churches&comma; retirement centers&comma; and skilled nursing facilities&period; This method inherently lacks the individualized clinical assessment necessary to determine medical necessity&period; Concurrently&comma; IBOs collected beneficiaries&&num;8217&semi; Medicare numbers and other <a href&equals;"https&colon;&sol;&sol;www&period;fraudswatch&period;com&sol;beware-of-medical-equipment-scams-in-2024-stay-informed-protect-yourself&sol;" data-wpil-monitor-id&equals;"1425">protected health information<&sol;a>&comma; filling out laboratory requisition forms&period; For facilitating these referrals and collections&comma; Genexe allegedly paid the IBOs kickbacks structured on a per-swab basis&period; Initially around &dollar;800 per swab&comma; these payments later increased to between &dollar;1&comma;000 and &dollar;2&comma;000&comma; depending on the type of test ordered&period; Such per-referral payments are considered classic kickbacks under the AKS&comma; as they directly incentivize the generation of business regardless of medical need&period;  <&sol;li>&NewLine;&NewLine;&NewLine;&NewLine;<li><strong>Securing Physician Orders via Telemedicine &amp&semi; Kickbacks&colon;<&sol;strong> The collected DNA specimens were shipped by the IBOs to Genexe&&num;8217&semi;s parent company&comma; Immerge&comma; located in Colorado&period; A crucial step remained&colon; obtaining a physician&&num;8217&semi;s order&comma; required for Medicare reimbursement&period; Genexe allegedly secured these orders <em>after<&sol;em> the samples were already collected&comma; utilizing agreements established with telemedicine companies and medical laboratories&period; The government contends that kickbacks were paid to these telemedicine providers or their associated companies to induce them to sign the necessary orders&period; This practice flagrantly violates Medicare&&num;8217&semi;s requirement that tests must be ordered by the beneficiary&&num;8217&semi;s <em>treating physician<&sol;em> who uses the results in patient management&period; It mirrors patterns identified in numerous government fraud alerts and enforcement actions targeting telemedicine schemes where providers&comma; often with little or no patient interaction&comma; rubber-stamp orders for unnecessary items or services in exchange for payment&period;  <&sol;li>&NewLine;&NewLine;&NewLine;&NewLine;<li><strong>Laboratory Testing &amp&semi; High-Value Billing&colon;<&sol;strong> With both the specimen and a physician order in hand&comma; Genexe forwarded the materials to a medical laboratory for testing&period; In some instances&comma; the initial laboratory might have outsourced the actual testing to another lab&period; The performing laboratory then billed Medicare for the CGx or PGx test&period; The government noted that these tests were regularly reimbursed at rates exceeding &dollar;6&comma;000 per test&comma; making them highly lucrative targets for fraudulent billing&period; The significant reimbursement potential is often the primary driver behind such large-scale fraud schemes&period;  <&sol;li>&NewLine;&NewLine;&NewLine;&NewLine;<li><strong>Kickbacks from Labs Back to Genexe&colon;<&sol;strong> The final alleged step involved the flow of money back to the scheme&&num;8217&semi;s orchestrators&period; Once Medicare reimbursed the laboratory&comma; Genexe allegedly received a percentage or portion of those Medicare funds from the laboratory&period; This payment represented an illegal kickback for Genexe having referred the profitable testing business &lpar;the completed swabs and prescriptions&rpar; to the lab&period; This completes the alleged cycle of kickbacks&comma; ensuring the marketing entity directly profited from the downstream fraudulent Medicare billing it initiated&period;  <&sol;li>&NewLine;<&sol;ol>&NewLine;<&sol;li>&NewLine;&NewLine;&NewLine;&NewLine;<li><strong>Settlement Details<&sol;strong> The agreement reached between the defendants and the government includes several key components&colon;&NewLine;<ul class&equals;"wp-block-list">&NewLine;<li><strong>Monetary Payment&colon;<&sol;strong> Genexe&comma; Immerge&comma; Jason Green&comma; and Jason Gross collectively agreed to pay &dollar;6 million to the United States&period; The specific contributions of each party are not typically detailed in public settlement announcements&period; The total settlement amount&comma; while substantial&comma; may reflect various factors beyond the total alleged fraudulent billing&period; Considerations often include the defendants&&num;8217&semi; ability to pay &lpar;especially given that both Genexe and Immerge are defunct &rpar;&comma; potential cooperation credits &lpar;though none were mentioned in this announcement&comma; they are a factor in many FCA settlements &rpar;&comma; and the government&&num;8217&semi;s assessment of litigation risk versus the certainty of recovery through settlement&period;  <&sol;li>&NewLine;&NewLine;&NewLine;&NewLine;<li><strong>Scope of Resolution&colon;<&sol;strong> The payment resolves the civil allegations brought by the USAO-EDPA under the False Claims Act and other statutes &lpar;implicitly including the Anti-Kickback Statute&rpar; related to the described genetic testing scheme during the specified timeframe&period; It does not typically resolve any potential criminal liability unless explicitly stated&period;  <&sol;li>&NewLine;&NewLine;&NewLine;&NewLine;<li><strong>Whistleblower &lpar;<em>Qui Tam<&sol;em>&rpar; Lawsuits&colon;<&sol;strong> The settlement specifically resolves the claims asserted in two <em>qui tam<&sol;em> lawsuits filed by whistleblowers&colon;&NewLine;<ul class&equals;"wp-block-list">&NewLine;<li><em>United States ex rel&period; Shimi v&period; Genexe&comma; LLC&comma; et al&period;<&sol;em>&comma; No&period; 19-CV-3660 &lpar;E&period;D&period; Pa&period;&rpar;<&sol;li>&NewLine;&NewLine;&NewLine;&NewLine;<li><em>United States ex rel&period; Covington v&period; Genexe&comma; LLC&comma; et al&period;<&sol;em>&comma; No&period; 23-CV-2915 &lpar;E&period;D&period; Pa&period;&rpar;  <&sol;li>&NewLine;<&sol;ul>&NewLine;<&sol;li>&NewLine;&NewLine;&NewLine;&NewLine;<li><strong>Relator Share&colon;<&sol;strong> As part of the resolution&comma; the four individuals who brought these <em>qui tam<&sol;em> actions &lpar;the relators&rpar; will collectively receive approximately &dollar;1&period;3 million from the federal government&&num;8217&semi;s &dollar;6 million recovery&period; This represents a relator share of about 21&period;7&percnt;&comma; falling within the standard 15&percnt; to 25&percnt; range stipulated by the FCA for cases in which the government intervenes and prosecutes the action&period;  <&sol;li>&NewLine;&NewLine;&NewLine;&NewLine;<li><strong>Crucial Disclaimer&colon;<&sol;strong> It is essential to reiterate the standard legal disclaimer included in the announcement&colon; <strong>&&num;8220&semi;The claims resolved by the settlement are allegations only and there has been no determination of civil liability&&num;8221&semi;<&sol;strong>&period; This signifies that the settlement is a compromise of disputed claims and does not constitute an admission of fault or liability by Genexe&comma; Immerge&comma; Green&comma; or Gross&period;  <&sol;li>&NewLine;<&sol;ul>&NewLine;<&sol;li>&NewLine;&NewLine;&NewLine;&NewLine;<li><strong>Official Statements &lpar;Contextualized&rpar;<&sol;strong> Statements from the involved government officials provide insight into the enforcement priorities and rationale&colon;&NewLine;<ul class&equals;"wp-block-list">&NewLine;<li><strong>U&period;S&period; Attorney David Metcalf&colon;<&sol;strong> His comments underscore the dual nature of the harm caused by such schemes&colon; they &&num;8220&semi;prey on the fears of patients&&num;8221&semi; and simultaneously &&num;8220&semi;waste taxpayer dollars by spending limited funds on medically unnecessary or nonexistent tests&&num;8221&semi;&period; He further affirmed the government&&num;8217&semi;s commitment to partnering with law enforcement to investigate fraud&comma; waste&comma; and abuse and utilizing &&num;8220&semi;every tool available&comma;&&num;8221&semi; prominently including the False Claims Act&comma; &&num;8220&semi;to recover improperly paid taxpayer funds&&num;8221&semi;&period; This highlights the focus on both patient protection and fiscal responsibility&period;  <&sol;li>&NewLine;&NewLine;&NewLine;&NewLine;<li><strong>HHS-OIG Special Agent in Charge Maureen Dixon&colon;<&sol;strong> Her statement emphasizes the professional and ethical obligations of healthcare providers&comma; stating they &&num;8220&semi;should only order testing which would benefit individual patient care&comma; not for personal gain&&num;8221&semi;&period; She reinforced the ongoing commitment of HHS-OIG&comma; alongside the U&period;S&period; Attorney&&num;8217&semi;s Office and other partners&comma; to &&num;8220&semi;evaluate and pursue allegations of kickbacks resulting in medically unnecessary services&&num;8221&semi;&period; This points to the critical link investigators draw between illegal financial incentives &lpar;kickbacks&rpar; and the provision of unnecessary care&period;  <&sol;li>&NewLine;<&sol;ul>&NewLine;<&sol;li>&NewLine;&NewLine;&NewLine;&NewLine;<li><strong>Government Personnel<&sol;strong> The announcement acknowledges the work of Assistant United States Attorney Mark J&period; Sherer and Auditor Denis J&period; Cooke in handling this matter for the USAO-EDPA&period;  <&sol;li>&NewLine;<&sol;ul>&NewLine;&NewLine;&NewLine;&NewLine;<h2 id&equals;"understanding-the-legal-framework-false-claims-act-and-antikickback-statute" class&equals;"rb-heading-index-1-105404 wp-block-heading">Understanding the Legal Framework&colon; False Claims Act and Anti-Kickback Statute<&sol;h2>&NewLine;&NewLine;&NewLine;&NewLine;<p>The Genexe settlement hinges on allegations of violating two powerful federal laws designed to protect the integrity of federal healthcare programs&colon; the False Claims Act &lpar;FCA&rpar; and the Anti-Kickback Statute &lpar;AKS&rpar;&period; A clear understanding of these statutes is essential to grasp the gravity of the allegations and the broader context of healthcare fraud enforcement&period;<&sol;p>&NewLine;&NewLine;&NewLine;&NewLine;<ul class&equals;"wp-block-list">&NewLine;<li><strong>The False Claims Act &lpar;FCA&rpar; &&num;8211&semi; The Government&&num;8217&semi;s Primary Tool Against Fraud<&sol;strong>&NewLine;<ul class&equals;"wp-block-list">&NewLine;<li><strong>Purpose &amp&semi; History&colon;<&sol;strong> Enacted originally during the Civil War in 1863 to combat fraud by defense contractors&comma; the FCA &lpar;codified at 31 U&period;S&period;C&period; §§ 3729-3733&rpar; serves as the federal government&&num;8217&semi;s principal civil remedy to redress fraud against its agencies and programs&comma; including Medicare and Medicaid&period; Its fundamental purpose is to protect the government—and by extension&comma; taxpayers—from being overcharged&comma; paying for substandard goods or services&comma; or otherwise being financially defrauded&period;  <&sol;li>&NewLine;&NewLine;&NewLine;&NewLine;<li><strong>Core Prohibitions&colon;<&sol;strong> The FCA imposes civil liability on any person or entity that&colon;&NewLine;<ul class&equals;"wp-block-list">&NewLine;<li>Knowingly presents&comma; or causes to be presented&comma; a false or fraudulent claim for payment or approval to the U&period;S&period; government&period;  <&sol;li>&NewLine;&NewLine;&NewLine;&NewLine;<li>Knowingly makes&comma; uses&comma; or causes to be made or used&comma; a false record or statement material to a false or fraudulent claim&period;  <&sol;li>&NewLine;&NewLine;&NewLine;&NewLine;<li>Conspires to commit a violation of the FCA&period;  <&sol;li>&NewLine;&NewLine;&NewLine;&NewLine;<li>Knowingly makes&comma; uses&comma; or causes to be made or used&comma; a false record or statement material to an obligation to pay or transmit money or property to the government&comma; or knowingly conceals or improperly avoids or decreases an obligation to pay or transmit money or property to the government &lpar;often called a &&num;8220&semi;reverse false claim&&num;8221&semi;&rpar;&period;  <&sol;li>&NewLine;<&sol;ul>&NewLine;<&sol;li>&NewLine;&NewLine;&NewLine;&NewLine;<li><strong>The &&num;8220&semi;Knowing&&num;8221&semi; Standard &lpar;Scienter&rpar;&colon;<&sol;strong> A critical aspect of the FCA is its definition of &&num;8220&semi;knowing&&num;8221&semi; conduct&period; Liability does <em>not<&sol;em> require proof of specific intent to defraud the government&period; Instead&comma; the statute defines &&num;8220&semi;knowing&&num;8221&semi; and &&num;8220&semi;knowingly&&num;8221&semi; to mean that a person&comma; with respect to information&colon;&NewLine;<ol class&equals;"wp-block-list">&NewLine;<li>Has actual knowledge of the information&&num;8217&semi;s falsity&semi;<&sol;li>&NewLine;&NewLine;&NewLine;&NewLine;<li>Acts in deliberate ignorance of the truth or falsity of the information&semi; or<&sol;li>&NewLine;&NewLine;&NewLine;&NewLine;<li>Acts in reckless disregard of the truth or falsity of the information&period; 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&period;  <&sol;li>&NewLine;<&sol;ol>&NewLine;<&sol;li>&NewLine;&NewLine;&NewLine;&NewLine;<li><strong>Materiality&colon;<&sol;strong> For a false statement or record to lead to FCA liability&comma; the falsehood must be &&num;8220&semi;material&&num;8221&semi; to the government&&num;8217&semi;s decision to pay the claim&period; The Supreme Court has clarified that the materiality standard generally looks to whether the falsehood has &&num;8220&semi;a natural tendency to influence&comma; or be capable of influencing&comma; the payment or receipt of money or property&period;&&num;8221&semi;  <&sol;li>&NewLine;&NewLine;&NewLine;&NewLine;<li><strong>Severe Penalties&colon;<&sol;strong> Violations of the FCA carry substantial financial penalties designed for deterrence and recovery&period; A defendant found liable faces&colon;&NewLine;<ul class&equals;"wp-block-list">&NewLine;<li><strong>Treble Damages&colon;<&sol;strong> Three times the amount of damages the government sustains because of the false claim&period;  <&sol;li>&NewLine;&NewLine;&NewLine;&NewLine;<li><strong>Mandatory Civil Penalties&colon;<&sol;strong> A per-claim penalty&comma; adjusted annually for inflation&period; For violations occurring after November 2&comma; 2015&comma; and assessed after February 12&comma; 2024&comma; the penalty range is &dollar;13&comma;946 to &dollar;27&comma;894 <em>per false claim<&sol;em>&period; For earlier violations&comma; the range was typically &dollar;5&comma;500 to &dollar;11&comma;000 per claim&period; Crucially&comma; each individual bill or claim submitted to the government that is deemed false can trigger a separate penalty&period; In schemes involving numerous billings&comma; these penalties can accumulate rapidly&comma; often exceeding the treble damages amount&period;  <&sol;li>&NewLine;<&sol;ul>&NewLine;<&sol;li>&NewLine;&NewLine;&NewLine;&NewLine;<li><strong>Criminal Counterpart&colon;<&sol;strong> There is also a criminal FCA statute &lpar;18 U&period;S&period;C&period; § 287&rpar; which can result in imprisonment and criminal fines for submitting false claims&period;  <&sol;li>&NewLine;&NewLine;&NewLine;&NewLine;<li><strong>Application in Healthcare&colon;<&sol;strong> The FCA is heavily utilized in the healthcare sector to combat fraud against Medicare&comma; Medicaid&comma; TRICARE&comma; and other government health programs&period; Common applications include billing for services not rendered&comma; billing for medically unnecessary services &lpar;as alleged in the Genexe case&rpar;&comma; upcoding &lpar;billing for a more complex service than provided&rpar;&comma; providing substandard care&comma; and submitting claims tainted by illegal kickbacks&period;  <&sol;li>&NewLine;<&sol;ul>&NewLine;<&sol;li>&NewLine;&NewLine;&NewLine;&NewLine;<li><strong>The Anti-Kickback Statute &lpar;AKS&rpar; &&num;8211&semi; Protecting Medical Judgment from Improper Influence<&sol;strong>&NewLine;<ul class&equals;"wp-block-list">&NewLine;<li><strong>Purpose&colon;<&sol;strong> The AKS &lpar;42 U&period;S&period;C&period; § 1320a-7b&lpar;b&rpar;&rpar; is a criminal statute designed to ensure that medical decisions are based on patients&&num;8217&semi; best interests&comma; not on improper financial incentives&period; Congress enacted it out of concern that kickbacks can corrupt medical judgment&comma; leading to overutilization of services&comma; increased program costs&comma; patient steering to potentially inappropriate providers&comma; unfair competition among providers&comma; and potential patient harm&period;  <&sol;li>&NewLine;&NewLine;&NewLine;&NewLine;<li>&ast;&ast;Core Prortly or covertly&comma; in cash or in kind – to induce or reward any of the following involving items or services payable by a federal healthcare program&colon;&NewLine;<ul class&equals;"wp-block-list">&NewLine;<li>Referring an individual for the furnishing or arranging for the furnishing of any item or service&semi; or<&sol;li>&NewLine;&NewLine;&NewLine;&NewLine;<li>Purchasing&comma; leasing&comma; ordering&comma; or arranging for or recommending purchasing&comma; leasing&comma; or ordering any good&comma; facility&comma; service&comma; or item&period; The statute applies to both sides of the transaction – those who pay&sol;offer kickbacks and those who solicit&sol;receive them&period;  <&sol;li>&NewLine;<&sol;ul>&NewLine;<&sol;li>&NewLine;&NewLine;&NewLine;&NewLine;<li><strong>Broad Definition of &&num;8220&semi;Remuneration&&num;8221&semi;&colon;<&sol;strong> The term &&num;8220&semi;remuneration&&num;8221&semi; is interpreted extremely broadly by HHS-OIG and the courts to encompass anything of value&period; This includes not only direct payments like cash bribes or rebates&comma; but also indirect benefits such as free or below-fair-market-value goods or services &lpar;like office space or equipment&rpar;&comma; excessive compensation for services &lpar;e&period;g&period;&comma; medical directorships&comma; consulting fees&rpar;&comma; gifts&comma; travel&comma; entertainment&comma; and waivers or reductions of patient cost-sharing obligations &lpar;copayments&sol;deductibles&rpar;&comma; unless specific exceptions are met&period;  <&sol;li>&NewLine;&NewLine;&NewLine;&NewLine;<li><strong>Intent Standard &lpar;&&num;8220&semi;Knowingly and Willfully&&num;8221&semi;&rpar;&colon;<&sol;strong> Violation requires proof that the defendant acted &&num;8220&semi;knowingly and willfully&period;&&num;8221&semi; While this is a criminal intent standard&comma; courts and HHS-OIG have interpreted &&num;8220&semi;willfully&&num;8221&semi; to mean acting with the knowledge that one&&num;8217&semi;s conduct is unlawful&comma; though specific knowledge of the AKS itself is not required&period; Crucially&comma; the government often employs the &&num;8220&semi;one purpose&&num;8221&semi; test&colon; if <em>any one purpose<&sol;em> of the remuneration is to induce or reward prohibited referrals or business&comma; the AKS may be violated&comma; even if the payment also serves other legitimate purposes&period;  <&sol;li>&NewLine;&NewLine;&NewLine;&NewLine;<li><strong>Severe Penalties&colon;<&sol;strong> AKS violations carry significant criminal&comma; civil&comma; and administrative penalties&colon;&NewLine;<ul class&equals;"wp-block-list">&NewLine;<li><strong>Criminal&colon;<&sol;strong> Felony conviction punishable by up to 10 years in prison and&sol;or fines up to &dollar;100&comma;000 per violation&period; &lpar;Note&colon; Some sources cite older penalty amounts like &dollar;25&comma;000&comma; but &dollar;100&comma;000 is the current statutory maximum per 42 U&period;S&period;C&period; § 1320a-7b&lpar;b&rpar;&rpar;&period;  <&sol;li>&NewLine;&NewLine;&NewLine;&NewLine;<li><strong>Civil Monetary Penalties &lpar;CMPs&rpar;&colon;<&sol;strong> Under the Civil Monetary Penalties Law &lpar;CMPL&rpar;&comma; HHS-OIG can impose CMPs of up to &dollar;50&comma;000 per kickback violation&comma; plus an assessment of up to three times the amount of the remuneration involved&period; &lpar;Note&colon; Some sources cite older CMP amounts&semi; &dollar;50&comma;000 is a commonly cited figure for AKS-related CMPs&comma; though specific CMP amounts can vary by violation type &rpar;&period;  <&sol;li>&NewLine;&NewLine;&NewLine;&NewLine;<li><strong>Exclusion&colon;<&sol;strong> Conviction of an AKS violation can lead to mandatory exclusion from participation in all federal healthcare programs &lpar;Medicare&comma; Medicaid&comma; etc&period;&rpar;&period; HHS-OIG also has permissive authority to exclude based on AKS violations even without a criminal conviction&period;  <&sol;li>&NewLine;<&sol;ul>&NewLine;<&sol;li>&NewLine;&NewLine;&NewLine;&NewLine;<li><strong>No Requirement for Patient Harm or Financial Loss&colon;<&sol;strong> Importantly&comma; 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&period; The statute targets the corrupting influence of the kickback itself&period; Therefore&comma; 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&period;  <&sol;li>&NewLine;&NewLine;&NewLine;&NewLine;<li><strong>Safe Harbors&colon;<&sol;strong> Recognizing that some commercially reasonable and beneficial arrangements could technically fall under the broad scope of the AKS&comma; Congress directed HHS-OIG to create regulatory &&num;8220&semi;safe harbors&&num;8221&semi;&period; These safe harbors describe specific payment and business practices that are protected from AKS liability if all of their detailed requirements are strictly met&period; Examples include certain arrangements for employment&comma; personal services and management contracts&comma; space and equipment rentals&comma; discounts&comma; and practitioner recruitment&comma; among many others&period; Compliance with a safe harbor is voluntary&semi; however&comma; 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&period;  <&sol;li>&NewLine;<&sol;ul>&NewLine;<&sol;li>&NewLine;&NewLine;&NewLine;&NewLine;<li><strong>The Critical Interplay Between FCA and AKS<&sol;strong> The relationship between the FCA and the AKS was significantly strengthened by the Patient Protection and Affordable Care Act &lpar;ACA&rpar; in 2010&period; The ACA amended the AKS to explicitly state that &&num;8220&semi;a claim that includes items or services resulting from a violation of constitutes a false or fraudulent claim for purposes of &lbrack;the FCA&rsqb;&&num;8221&semi; &lpar;42 U&period;S&period;C&period; § 1320a-7b&lpar;g&rpar;&rpar;&period;   This amendment created a powerful link&colon; 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&period; This <em>per se<&sol;em> falsity means the government &lpar;or a whistleblower&rpar; can establish FCA liability – triggering treble damages and per-claim penalties – by demonstrating an underlying AKS violation connected to the claims&comma; without needing to separately prove the claims were false for other reasons &lpar;like lack of medical necessity&comma; though that can be an independent basis for FCA liability&rpar;&period; In the context of the Genexe settlement&comma; this interplay is crucial&period; The government alleged <em>both<&sol;em> that the CGx&sol;PGx tests were medically unnecessary &lpar;a direct basis for FCA liability&rpar; <em>and<&sol;em> that they were procured via kickbacks violating the AKS &lpar;an independent basis for FCA liability&rpar;&period; This dual theory strengthens the government&&num;8217&semi;s case and underscores the severe consequences when financial inducements taint healthcare services billed to federal programs&period;  <&sol;li>&NewLine;&NewLine;&NewLine;&NewLine;<li><strong>Comparative Overview&colon; FCA vs&period; AKS<&sol;strong> To further clarify the distinct yet related roles of these statutes&comma; the following table summarizes their key features&colon;<&sol;li>&NewLine;<&sol;ul>&NewLine;&NewLine;&NewLine;&NewLine;<figure class&equals;"wp-block-table"><table class&equals;"has-fixed-layout"><tbody><tr><th>Feature<&sol;th><th>False Claims Act &lpar;Civil &&num;8211&semi; 31 U&period;S&period;C&period; § 3729&rpar;<&sol;th><th>Anti-Kickback Statute &lpar;Criminal&sol;Civil&sol;Admin &&num;8211&semi; 42 U&period;S&period;C&period; § 1320a-7b&lpar;b&rpar;&rpar;<&sol;th><&sol;tr><tr><td><strong>Primary Purpose<&sol;strong><&sol;td><td>Protect government funds from false&sol;fraudulent claims<&sol;td><td>Protect medical judgment &amp&semi; patient welfare from corrupting influence of kickbacks<&sol;td><&sol;tr><tr><td><strong>Prohibited Conduct<&sol;strong><&sol;td><td>Knowingly submitting &lpar;or causing submission of&rpar; false&sol;fraudulent claims&semi; false records material to claims&semi; reverse false claims&semi; conspiracy<&sol;td><td>Knowingly &amp&semi; willfully offering&comma; paying&comma; soliciting&comma; or receiving remuneration to induce&sol;reward federal healthcare program referrals&sol;business<&sol;td><&sol;tr><tr><td><strong>Intent Standard<&sol;strong><&sol;td><td>&&num;8220&semi;Knowing&&num;8221&semi; &equals; Actual knowledge&comma; deliberate ignorance&comma; or reckless disregard<&sol;td><td>&&num;8220&semi;Knowing &amp&semi; Willful&&num;8221&semi; &equals; Intent to do something unlawful &lpar;one purpose test often applied&rpar;<&sol;td><&sol;tr><tr><td><strong>Key Penalties<&sol;strong><&sol;td><td>Treble damages &plus; mandatory per-claim penalties &lpar;&dollar;13&comma;946-&dollar;27&comma;894 post-2&sol;12&sol;24&rpar;<&sol;td><td>Felony conviction &lpar;up to 10 yrs prison&comma; &dollar;100k fine&rpar;&semi; CMPs &lpar;up to &dollar;50k &plus; 3x remuneration&rpar;&semi; Exclusion from federal programs<&sol;td><&sol;tr><tr><td><strong>Whistleblower Provision<&sol;strong><&sol;td><td>Yes &lpar;<em>Qui Tam<&sol;em> &&num;8211&semi; 31 U&period;S&period;C&period; § 3730&rpar;<&sol;td><td>No direct provision&comma; but AKS violations are basis for FCA <em>qui tam<&sol;em> suits<&sol;td><&sol;tr><tr><td><strong>Safe Harbors<&sol;strong><&sol;td><td>Not Applicable<&sol;td><td>Yes&comma; specific regulatory exceptions meeting strict criteria<&sol;td><&sol;tr><&sol;tbody><&sol;table><&sol;figure>&NewLine;&NewLine;&NewLine;&NewLine;<p><&sol;p>&NewLine;&NewLine;&NewLine;&NewLine;<ul class&equals;"wp-block-list">&NewLine;<li><strong>Broader Legal Context&colon; The Spectrum of Intent<&sol;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&period; For instance&comma; the Physician Self-Referral Law &lpar;Stark Law&rpar;&comma; which prohibits physicians from referring Medicare&sol;Medicaid patients for certain &&num;8220&semi;designated health services&&num;8221&semi; to entities with which they &lpar;or an immediate family member&rpar; have a financial relationship &lpar;unless an exception applies&rpar;&comma; is generally considered a &&num;8220&semi;strict liability&&num;8221&semi; statute&period; This means proof of specific intent to violate the Stark Law is not required&semi; a violation can occur based simply on the existence of a prohibited financial relationship and referral&comma; regardless of the parties&&num;8217&semi; intentions&period;   This contrasts sharply with the AKS&comma; which requires proof of &&num;8220&semi;knowing and willful&&num;8221&semi; intent &lpar;albeit potentially satisfied by the &&num;8220&semi;one purpose&&num;8221&semi; test&rpar; &comma; and the civil FCA&comma; which requires proof of &&num;8220&semi;knowing&&num;8221&semi; conduct &lpar;actual knowledge&comma; deliberate ignorance&comma; or reckless disregard&rpar; but not specific intent to defraud&period; This range of intent standards means that healthcare organizations must design compliance programs capable of preventing and detecting a wide array of potential violations&comma; from inadvertent billing errors that could meet the FCA&&num;8217&semi;s &&num;8220&semi;reckless disregard&&num;8221&semi; standard&comma; to technical Stark Law violations arising from complex financial arrangements&comma; to deliberate kickback schemes violating the AKS&period; The Genexe case&comma; focusing on alleged knowing submission of false claims and willful kickbacks&comma; sits at the more intentional end of this spectrum&period;  <&sol;li>&NewLine;<&sol;ul>&NewLine;&NewLine;&NewLine;&NewLine;<h2 id&equals;"the-science-and-the-scheme-cgx-pgx-and-medical-necessity-fraud" class&equals;"rb-heading-index-2-105404 wp-block-heading">The Science and the Scheme&colon; CGx&comma; PGx&comma; and Medical Necessity Fraud<&sol;h2>&NewLine;&NewLine;&NewLine;&NewLine;<p>The allegations against Genexe revolve around two specific types of advanced laboratory tests&colon; Cancer Genomics &lpar;CGx&rpar; and Pharmacogenomics &lpar;PGx&rpar;&period; Understanding what these tests are&comma; when Medicare covers them&comma; and how the alleged scheme circumvented these rules is crucial&period;<&sol;p>&NewLine;&NewLine;&NewLine;&NewLine;<ul class&equals;"wp-block-list">&NewLine;<li><strong>Explaining the Tests&colon; CGx and PGx<&sol;strong>&NewLine;<ul class&equals;"wp-block-list">&NewLine;<li><strong>Definitions and Purpose&colon;<&sol;strong>&NewLine;<ul class&equals;"wp-block-list">&NewLine;<li><strong>CGx &lpar;Cancer Genomics&rpar; Testing&colon;<&sol;strong> This type of genetic testing analyzes a patient&&num;8217&semi;s DNA to identify specific inherited mutations in genes that might indicate a higher risk of developing certain types of cancer in the future&period; It focuses on hereditary predispositions&period;  <&sol;li>&NewLine;&NewLine;&NewLine;&NewLine;<li><strong>PGx &lpar;Pharmacogenomics&rpar; Testing&colon;<&sol;strong> This testing examines a patient&&num;8217&semi;s genetic makeup to identify variations that can affect how their body responds to specific medications&period; The goal is to help predict potential adverse drug reactions&comma; lack of efficacy&comma; or the need for dosage adjustments&comma; thereby optimizing drug therapy for safety and effectiveness&period;  <&sol;li>&NewLine;<&sol;ul>&NewLine;<&sol;li>&NewLine;&NewLine;&NewLine;&NewLine;<li><strong>Process&colon;<&sol;strong> Both types of tests typically involve obtaining a DNA sample from the patient&comma; often through a simple cheek &lpar;buccal&rpar; swab to collect saliva and cells&period; This sample&comma; along with a requisition form containing patient and ordering provider information&comma; is then sent to a specialized laboratory for analysis using techniques like Next Generation Sequencing &lpar;NGS&rpar;&period;  <&sol;li>&NewLine;<&sol;ul>&NewLine;<&sol;li>&NewLine;&NewLine;&NewLine;&NewLine;<li><strong>Medicare&&num;8217&semi;s Rules&colon; Coverage and Medical Necessity<&sol;strong> Medicare coverage for any diagnostic test&comma; including advanced genetic testing&comma; is contingent upon meeting strict criteria&comma; primarily centered around the concept of &&num;8220&semi;medical necessity&period;&&num;8221&semi;&NewLine;<ul class&equals;"wp-block-list">&NewLine;<li><strong>Fundamental Requirement&colon; &&num;8220&semi;Reasonable and Necessary&&num;8221&semi;&colon;<&sol;strong> The cornerstone of Medicare coverage is the statutory requirement that payment may only be made for items or services that are &&num;8220&semi;reasonable and necessary for the diagnosis or treatment of illness or injury or to improve the functioning of a malformed body member&&num;8221&semi; &lpar;Social Security Act&comma; Title XVIII&comma; Section 1862&lpar;a&rpar;&lpar;1&rpar;&lpar;A&rpar;&rpar;&period; Tests performed solely for screening purposes &lpar;detecting disease or predisposition in asymptomatic individuals&rpar; are generally <em>not<&sol;em> covered by Medicare unless specifically mandated by Congress through legislation &lpar;e&period;g&period;&comma; certain cancer screenings like mammograms or colorectal cancer screening tests&rpar;&period;  <&sol;li>&NewLine;&NewLine;&NewLine;&NewLine;<li><strong>Physician Order Requirement&colon;<&sol;strong> Medicare regulations explicitly state that all diagnostic laboratory tests must be ordered by the physician &lpar;or other qualified non-physician practitioner&rpar; who is <em>treating<&sol;em> the beneficiary for a specific medical problem and who <em>uses the results<&sol;em> in the management of that beneficiary&&num;8217&semi;s specific medical problem&period; Tests ordered by physicians not involved in the patient&&num;8217&semi;s treatment&comma; or tests whose results are not integrated into the patient&&num;8217&semi;s care plan&comma; are deemed not reasonable and necessary and are therefore not payable by Medicare&period;  <&sol;li>&NewLine;&NewLine;&NewLine;&NewLine;<li><strong>Specific Genetic Testing Criteria &lpar;NCDs&sol;LCDs&rpar;&colon;<&sol;strong> Due to the complexity and evolving nature of genetic testing&comma; the Centers for Medicare &amp&semi; Medicaid Services &lpar;CMS&rpar; and its regional contractors &lpar;Medicare Administrative Contractors or MACs&rpar; have developed specific coverage policies&period; National Coverage Determinations &lpar;NCDs&rpar; apply nationwide&comma; while Local Coverage Determinations &lpar;LCDs&rpar; provide guidance within specific MAC jurisdictions when an NCD doesn&&num;8217&semi;t exist or needs further definition&period; These policies outline the precise clinical circumstances&comma; patient criteria&comma; and test requirements for coverage&period;&NewLine;<ul class&equals;"wp-block-list">&NewLine;<li><em><strong>CGx Coverage Examples &lpar;NCD 90&period;2&rpar;&colon;<&sol;strong><&sol;em> CMS NCD 90&period;2 provides coverage for Next Generation Sequencing &lpar;NGS&rpar; tests for Medicare beneficiaries with cancer under specific conditions&period; For <em>somatic<&sol;em> &lpar;tumor&rpar; testing&comma; the patient must have recurrent&comma; relapsed&comma; refractory&comma; metastatic&comma; or advanced stage III or IV cancer&comma; have decided to seek further treatment&comma; and not have been previously tested with the same NGS test for the same genetic content&period; For <em>germline<&sol;em> &lpar;inherited&rpar; testing&comma; the patient must have <em>any<&sol;em> cancer diagnosis&comma; a clinical indication and risk factor for hereditary cancer&comma; and no prior same-content germline NGS test&period; Critically&comma; broad CGx testing for general cancer <em>screening<&sol;em> in patients without a cancer diagnosis or specific high-risk criteria outlined in NCDs&sol;LCDs is generally not considered medically necessary by Medicare&period;  <&sol;li>&NewLine;&NewLine;&NewLine;&NewLine;<li><em><strong>PGx Coverage Examples &lpar;MolDX LCDs&rpar;&colon;<&sol;strong><&sol;em> Several MACs&comma; particularly those participating in the Molecular Diagnostics &lpar;MolDX&rpar; program&comma; have issued LCDs for PGx testing&period; Common requirements include&colon; the patient must have a condition for which a specific drug therapy is being considered or is already in use&semi; the drug must have a known gene-drug interaction recognized as clinically actionable &lpar;e&period;g&period;&comma; by the FDA label or Clinical Pharmacogenetics Implementation Consortium &lpar;CPIC&rpar; Level A or B guidelines&rpar;&semi; the test result must be necessary to directly impact the clinician&&num;8217&semi;s decision-making regarding drug selection&comma; dosage&comma; or avoidance&semi; and the test must be ordered by the treating clinician responsible for the patient&&num;8217&semi;s pharmacologic management&period; PGx testing is explicitly <em>not<&sol;em> considered reasonable and necessary merely because a patient has a certain diagnosis or before non-genetic factors &lpar;like other medical conditions or medications&rpar; have been considered in drug selection&period; Furthermore&comma; performing duplicative germline testing &lpar;re-testing the same genetic content&rpar; is not covered as it provides no new clinical information&period;  <&sol;li>&NewLine;<&sol;ul>&NewLine;<&sol;li>&NewLine;&NewLine;&NewLine;&NewLine;<li><strong>Documentation Requirements&colon;<&sol;strong> Adequate documentation in the patient&&num;8217&semi;s medical record is essential to support the medical necessity of any ordered test&comma; including genetic tests&period; 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&period; This documentation should clearly link the test to the patient&&num;8217&semi;s specific medical condition and the treating physician&&num;8217&semi;s management plan&period;  <&sol;li>&NewLine;<&sol;ul>&NewLine;<&sol;li>&NewLine;&NewLine;&NewLine;&NewLine;<li><strong>How the Genexe Scheme Allegedly Circumvented the Rules<&sol;strong> The government&&num;8217&semi;s allegations suggest the Genexe scheme systematically bypassed these fundamental Medicare rules&colon;&NewLine;<ul class&equals;"wp-block-list">&NewLine;<li><strong>Bypassing the Treating Physician&colon;<&sol;strong> The core of the alleged scheme involved using marketers &lpar;IBOs&rpar; to obtain specimens and then using unrelated telemedicine providers&comma; allegedly paid kickbacks&comma; to generate the necessary physician orders&period; These telemedicine providers were generally not the beneficiaries&&num;8217&semi; treating physicians&comma; had little or no prior relationship with the patients&comma; and often conducted only brief &lpar;if any&rpar; consultations&period; 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&period;  <&sol;li>&NewLine;&NewLine;&NewLine;&NewLine;<li><strong>Lack of Individualized Medical Necessity Assessment&colon;<&sol;strong> By soliciting beneficiaries in non-clinical settings and obtaining physician orders through telemedicine encounters allegedly driven by kickbacks rather than clinical judgment&comma; the scheme inherently lacked any meaningful&comma; individualized assessment of medical necessity&period; The tests were allegedly ordered <em>en masse<&sol;em> based on the success of recruitment efforts&comma; not based on whether each specific beneficiary met the stringent NCD or LCD criteria for CGx or PGx testing &lpar;e&period;g&period;&comma; having advanced cancer for somatic CGx&comma; or needing a specific drug with an actionable gene interaction for PGx&rpar;&period; This constitutes a failure to meet the &&num;8220&semi;reasonable and necessary&&num;8221&semi; standard&period;  <&sol;li>&NewLine;&NewLine;&NewLine;&NewLine;<li><strong>Targeting High Reimbursement Tests&colon;<&sol;strong> The focus on CGx and PGx tests&comma; noted by the government as being reimbursed at over 6&comma;000each&comma;suggeststheschemewasfinanciallymotivated&comma;aimingtomaximizerevenuefromeachimproperlyprocuredtestbilledtoMedicare&period;&lbrack;1&rsqb;∗∗∗ExploitingComplexityandLabChallenges∗∗Theverycomplexitysurroundinggenetictestingcoveragecontributestothevulnerabilityexploitedbysuchschemes&period;NCDsandLCDsaredetailedandtechnical&comma;makingitdifficultforbeneficiaries&comma;andsometimesevennon−specialistproviders&comma;tofullygraspwhentheseexpensivetestsaregenuinelyindicatedandcoveredbyMedicare&period;&lbrack;6&comma;7&rsqb;Fraudsterscapitalizeonthiscomplexitythroughdeceptivemarketing&comma;suchasoffering&&num;8221&semi;free&&num;8221&semi;tests&comma;whichobscuresthefactthatMedicarewillonlypayifstrictcriteriaaremet&comma;potentiallyleavingthebeneficiaryliableforthousandsofdollarsiftheclaimisdenied&period;&lbrack;17&comma;18&comma;22&rsqb;Theuseofintermediarieslikemarketersandnon−treatingtelemedicinephysiciansfurtherobfuscatestheprocessanddistancesthefraudulentorderingfromlegitimateclinicalworkflows&period;&lbrack;1&comma;26&comma;31&comma;32&comma;33&comma;38&comma;40&rsqb;Laboratoriesinvolvedinprocessingthesetestsfacesignificantcompliancechallenges&period;WhileHHS−OIGguidanceclarifiesthatlabscannotmakethefinalmedicalnecessitydetermination&comma;italsostatesthatlabsshouldonlysubmitclaimsforservicestheyhavereasontobelievearemedicallynecessaryandshouldbepreparedtoprovidesupportingdocumentation&period;&lbrack;129&rsqb;InschemesliketheoneallegedagainstGenexe&comma;labsreceiverequisitionformssignedbylicensedphysiciansobtainedviatelemedicine&period;Verifyingthelegitimacyoftheupstreamorderingprocessandthetruemedicalnecessityforeachtest&comma;especiallywhendealingwithhighvolumesfrompotentiallyunknowntelemedicineproviders&comma;canbedifficult&period;However&comma;theallegationthatlabspaidkickbacks∗back∗toGenexesuggestspotentialcomplicityinthisspecificcase&period;&lbrack;1&rsqb;Regardlessofcomplicity&comma;labsmustimplementrobustcompliancemeasures&comma;includingscrutinizingorderingpatterns&comma;verifyingprovidercredentials&comma;andpotentiallyrequiringenhanceddocumentationfortestsorderedthroughlesstraditionalchannelsliketelemedicineplatformsassociatedwithmarketingentities&comma;tomitigatetheirownFCAandAKSrisks&period;∗∗Section4&colon;IndustryContext&colon;TheRoleofMarketingandTelemedicineinHealthcareFraud∗∗TheGenexesettlementisnotanisolatedincidentbutratherreflectsbroadertrendswherelegitimatehealthcareindustrycomponents—marketingorganizationsandtelemedicineplatforms—havebeenco−optedandexploitedinfraudulentschemestargetingfederalhealthcareprograms&period;∗∗∗MarketingOrganizationsinHealthcare&colon;ADouble−EdgedSword∗∗∗∗∗LegitimateRolesandBusinessModels&colon;∗∗Healthcaremarketingorganizationsplayavalidandoftennecessaryroleinthemodernhealthcareecosystem&period;Theyhelpraiseawarenessaboutdiseases&comma;treatments&comma;andavailableservices&semi;educatepatients&semi;generateleadsforprovidersandhealthsystems&semi;andfacilitateconnectionsbetweenpatientsandappropriatecare&period;&lbrack;132&comma;133&comma;134&rsqb;Businessmodelsvary&comma;includingservice−basedapproachesfocusedonpatientacquisition&lpar;oftenmeasuredbyCustomerAcquisitionCost−CAC&rpar;andproduct−basedapproachesfocusedonmaximizingReturnonAdSpend&lpar;ROAS&rpar;&period;&lbrack;132&rsqb;Buildingtrustandcommunicatingvaluearekeyfunctions&period;&lbrack;134&comma;135&rsqb;Effectivemarketingconsidersthepatientjourney&comma;frominitialawarenesstoresearchanddecision−making&period;&lbrack;132&rsqb;∗∗∗The&&num;8221&semi;DarkSide&&num;8221&semi;&colon;FacilitatingFraudThroughKickbacks&colon;∗∗Despitelegitimatefunctions&comma;third−partymarketingorganizationshavefrequentlyemergedascentralfiguresinmajorhealthcarefraudenforcementactions&period;&lbrack;1&comma;19&comma;24&comma;26&comma;27&comma;30&comma;31&comma;32&comma;33&comma;34&comma;35&comma;36&comma;38&comma;39&comma;40&comma;41&comma;42&comma;77&comma;82&comma;131&comma;136&comma;137&comma;138&comma;139&comma;140&comma;141&comma;142&comma;143&comma;144&comma;145&comma;146&comma;147&rsqb;Theseschemesofteninvolvethemarketersreceivingillegalkickbacksfromproviders&comma;labs&comma;orDMEcompaniesforgeneratingpatientreferralsorleads&period;Conversely&comma;marketersmaypaykickbackstobeneficiaries&lpar;e&period;g&period;&comma;through&&num;8221&semi;free&&num;8221&semi;offers&rpar;ortophysicians&sol;telemedicinecompaniestosecureordersfortheproductsorservicestheyarepromoting&period;HHS−OIGhasissuedspecificSpecialFraudAlertswarningaboutsuspectmarketingarrangements&comma;includingthoseinvolvingpaymentsbetweenMedicareAdvantageplans&comma;providers&comma;andmarketers&period;&lbrack;30&comma;69&comma;139&rsqb;Thestructureofteninvolvesaggressive&comma;sometimesdeceptive&comma;outreachtobeneficiaries&comma;followedbysteeringthemtowardsspecific&comma;oftenhigh−cost&comma;servicesorproductssolelyforfinancialgain&comma;inviolationoftheAKS&period;∗∗∗GenexeasaCaseStudy&colon;∗∗TheallegationsagainstGenexeanditsparentImmergeplacethemsquarelywithinthisproblematiccontext&period;Genexe&comma;operatedasamarketingarmofImmerge&comma;allegedlybuiltabusinessmodelcenteredonpayingitsIBOnetworkkickbacks&lpar;&sol;swab&rpar; to recruit Medicare beneficiaries for genetic tests&period; This structure incentivized volume over medical necessity&comma; directly implicating the AKS&period; Immerge&&num;8217&semi;s background as a general sales and marketing firm for diverse industries entering the complex&comma; highly regulated healthcare space may illustrate a significant risk&colon; applying standard&comma; volume-driven sales tactics &lpar;like per-unit commissions&rpar; without adequate healthcare compliance expertise can lead directly to violations of laws like the AKS&comma; resulting in substantial FCA liability&period; This underscores the critical need for any entity involved in healthcare marketing or lead generation&comma; especially for federally reimbursed services&comma; to invest heavily in specialized compliance knowledge and structures&period; It also highlights the due diligence burden on providers and labs when contracting with marketing partners&period;  <&sol;li>&NewLine;<&sol;ul>&NewLine;<&sol;li>&NewLine;&NewLine;&NewLine;&NewLine;<li><strong>Telemedicine&&num;8217&semi;s Role and Vulnerabilities<&sol;strong>&NewLine;<ul class&equals;"wp-block-list">&NewLine;<li><strong>Benefits and Expansion&colon;<&sol;strong> Telemedicine and telehealth have revolutionized healthcare delivery&comma; dramatically expanding access to care&comma; improving convenience for patients&comma; and increasing operational efficiency for providers&period; The COVID-19 pandemic accelerated this adoption significantly&period; Various business models exist&comma; including direct-to-consumer &lpar;DTC&rpar; platforms&comma; business-to-business &lpar;B2B&rpar; solutions for healthcare organizations&comma; hybrid models&comma; and Platform-as-a-Service &lpar;PaaS&rpar; offerings&period; Technologies like AI&comma; remote monitoring&comma; and EHR integration continue to enhance telehealth capabilities&period;  <&sol;li>&NewLine;&NewLine;&NewLine;&NewLine;<li><strong>Exploitation in Fraud Schemes&colon;<&sol;strong> Despite its benefits&comma; the remote nature of telemedicine creates unique vulnerabilities that fraudsters have aggressively exploited&period; Common elements in fraudulent telemedicine schemes identified by DOJ and OIG include&colon;&NewLine;<ul class&equals;"wp-block-list">&NewLine;<li><strong>Kickbacks for Orders&colon;<&sol;strong> Telemedicine companies paying physicians or other practitioners &lpar;often recruited nationally and working as independent contractors&rpar; on a per-order or per-prescription basis&comma; directly linking compensation to the volume of federally reimbursed items&sol;services generated&period;  <&sol;li>&NewLine;&NewLine;&NewLine;&NewLine;<li><strong>Lack of Legitimate Provider-Patient Relationship&colon;<&sol;strong> Providers ordering tests&comma; DME&comma; or medications for beneficiaries they have never met&comma; spoken to&comma; or only interacted with briefly via phone or a superficial platform review&comma; without conducting a meaningful clinical assessment or establishing a valid treating relationship&period; This practice&comma; sometimes referred to as &&num;8220&semi;robo-signing&&num;8221&semi; or involving &&num;8220&semi;happy clickers&comma;&&num;8221&semi; directly undermines medical necessity requirements&period;  <&sol;li>&NewLine;&NewLine;&NewLine;&NewLine;<li><strong>Targeting Specific High-Cost Items&colon;<&sol;strong> Schemes often focus narrowly on ordering specific categories of high-reimbursement items&comma; such as orthotic braces &lpar;DME&rpar;&comma; genetic tests &lpar;CGx&sol;PGx&rpar;&comma; or compounded prescription creams&comma; rather than providing comprehensive care&period; This limits the practitioner&&num;8217&semi;s clinical options and suggests the arrangement&&num;8217&semi;s primary purpose is financial gain&period;  <&sol;li>&NewLine;<&sol;ul>&NewLine;<&sol;li>&NewLine;&NewLine;&NewLine;&NewLine;<li><strong>OIG&sol;DOJ Enforcement Focus&colon;<&sol;strong> Recognizing these risks&comma; HHS-OIG issued a specific Special Fraud Alert in July 2022 cautioning practitioners about suspect telemedicine arrangements&period; This followed numerous large-scale DOJ enforcement actions&comma; including &&num;8220&semi;Operation Brace Yourself&&num;8221&semi; &lpar;targeting DME&sol;telemedicine fraud&rpar; &comma; &&num;8220&semi;Operation Double Helix&&num;8221&semi; &lpar;targeting genetic testing&sol;telemedicine fraud&rpar; &comma; and others&comma; collectively involving billions of dollars in alleged fraudulent claims&period;  <&sol;li>&NewLine;&NewLine;&NewLine;&NewLine;<li><strong>Genexe Connection&colon;<&sol;strong> The alleged Genexe scheme fits this pattern precisely&period; Genexe purportedly contracted with telemedicine companies to obtain the necessary physician sign-offs for genetic tests solicited by its marketers&comma; allegedly involving kickbacks to secure these orders from non-treating physicians&period; This highlights how telemedicine platforms can be misused as a crucial link in the chain of fraudulent billing&comma; providing a veneer of legitimacy &lpar;a physician&&num;8217&semi;s order&rpar; for services that lack genuine medical justification&period;  <&sol;li>&NewLine;<&sol;ul>&NewLine;<&sol;li>&NewLine;&NewLine;&NewLine;&NewLine;<li><strong>The Convergence of Risk Factors<&sol;strong> The Genexe case exemplifies a dangerous convergence of factors that create fertile ground for large-scale healthcare fraud&period; Aggressive&comma; potentially deceptive marketing practices provide the mechanism for patient recruitment&comma; often targeting vulnerable populations like Medicare beneficiaries&period; Telemedicine platforms&comma; when misused&comma; offer a way to bypass traditional clinical gatekeeping and obtain physician orders remotely&comma; often without adequate patient assessment or establishment of medical necessity&period; Finally&comma; the availability of high-reimbursement services&comma; such as complex genetic tests or expensive DME &comma; provides the substantial financial incentive that fuels these elaborate schemes&period; Federal enforcement agencies clearly recognize this convergence&comma; leading to coordinated takedowns specifically targeting these interconnected elements&period; Consequently&comma; effective compliance requires addressing risks at each stage&colon; ensuring ethical marketing&comma; validating legitimate telemedicine practices and provider-patient relationships&comma; and rigorously verifying the medical necessity and appropriateness of the underlying service or item being billed&period;  <&sol;li>&NewLine;<&sol;ul>&NewLine;&NewLine;&NewLine;&NewLine;<h2 id&equals;"the-bigger-picture-nationwide-crackdown-on-genetic-testing-fraud" class&equals;"rb-heading-index-3-105404 wp-block-heading">The Bigger Picture&colon; Nationwide Crackdown on Genetic Testing Fraud<&sol;h2>&NewLine;&NewLine;&NewLine;&NewLine;<p>The &dollar;6 million Genexe settlement is a component of a much larger&comma; ongoing federal effort to combat widespread fraud involving genetic testing&comma; particularly targeting the Medicare program&period; This area has become a significant <a href&equals;"https&colon;&sol;&sol;www&period;fraudswatch&period;com&sol;covid-19-relief-fraud-the-case-of-casie-hynes-and-the-2-million-scheme-a-deep-dive-into-pandemic-loan-abuse&sol;" data-wpil-monitor-id&equals;"1424">enforcement priority for both the Department of Justice<&sol;a> &lpar;DOJ&rpar; and the HHS Office of Inspector General &lpar;HHS-OIG&rpar;&period;<&sol;p>&NewLine;&NewLine;&NewLine;&NewLine;<ul class&equals;"wp-block-list">&NewLine;<li><strong>A Top Enforcement Priority<&sol;strong> Numerous government reports&comma; press releases&comma; and official statements confirm that fraud related to genetic testing &lpar;both CGx and PGx&rpar; is a major concern and a focal point for investigation and prosecution&period; It is frequently mentioned in nationwide enforcement sweeps and annual fraud reports&period;  <&sol;li>&NewLine;&NewLine;&NewLine;&NewLine;<li><strong>Scale of the Problem<&sol;strong> The financial magnitude of alleged genetic testing fraud is staggering&period; Key examples include&colon;&NewLine;<ul class&equals;"wp-block-list">&NewLine;<li><strong>Operation Double Helix &lpar;2019&rpar;&colon;<&sol;strong> This landmark federal takedown resulted in charges against 35 individuals associated with telemedicine companies and CGx labs for allegedly fraudulent billing exceeding &dollar;2&period;1 billion&period;  <&sol;li>&NewLine;&NewLine;&NewLine;&NewLine;<li><strong>LabSolutions Case &lpar;2022 Sentence&rpar;&colon;<&sol;strong> The owner of LabSolutions LLC was sentenced to 27 years in prison for a scheme involving over &dollar;463 million in fraudulent claims for unnecessary genetic tests procured through kickbacks&comma; with Medicare paying out over &dollar;187 million&period;  <&sol;li>&NewLine;&NewLine;&NewLine;&NewLine;<li><strong>Personalized Genomics Case &lpar;2019 Guilty Plea&rpar;&colon;<&sol;strong> The owner of Personalized Genetics LLC pleaded guilty in a scheme that billed Medicare over &dollar;127 million for CGx and PGx testing in just one year&comma; resulting in reimbursements of approximately &dollar;60 million&period;  <&sol;li>&NewLine;&NewLine;&NewLine;&NewLine;<li><strong>OIG Data Brief &lpar;2021&rpar;&colon;<&sol;strong> An OIG analysis found that total Medicare Part B payments for genetic tests quadrupled from &dollar;351 million in 2016 to &dollar;1&period;41 billion in 2019&comma; with significant increases in the number of labs billing&comma; providers ordering&comma; and tests per beneficiary&comma; raising concerns about overuse and potential fraud&period;  <&sol;li>&NewLine;&NewLine;&NewLine;&NewLine;<li><strong>Ongoing Estimates&colon;<&sol;strong> An HHS-OIG agent cited an estimate of &dollar;7 billion in genetic testing fraud from 2018 to early 2024&comma; highlighting the persistent nature of the problem&period;  <&sol;li>&NewLine;<&sol;ul>&NewLine;<&sol;li>&NewLine;&NewLine;&NewLine;&NewLine;<li><strong>Common Scheme Elements &lpar;Reinforced&rpar;<&sol;strong> Across these numerous cases and government warnings&comma; a consistent fraudulent model emerges&comma; often involving the following steps&colon;&NewLine;<ol class&equals;"wp-block-list">&NewLine;<li><strong>Deceptive Recruitment&colon;<&sol;strong> Marketers or call centers target Medicare beneficiaries &lpar;often seniors or disabled individuals&rpar; using telemarketing&comma; booths at events&comma; health fairs&comma; or door-to-door visits&comma; offering &&num;8220&semi;free&&num;8221&semi; genetic tests &lpar;CGx or PGx&rpar;&period; They often use scare tactics or misleading claims about preventing disease or improving medication safety to obtain the beneficiary&&num;8217&semi;s Medicare information and a DNA sample &lpar;cheek swab&rpar;&period;  <&sol;li>&NewLine;&NewLine;&NewLine;&NewLine;<li><strong>Kickbacks to Marketers&colon;<&sol;strong> The marketing companies or individuals involved are often paid illegal kickbacks&comma; frequently structured as a percentage of the eventual Medicare reimbursement or a flat fee per swab&sol;referral obtained&period;  <&sol;li>&NewLine;&NewLine;&NewLine;&NewLine;<li><strong>Telemedicine Orders &amp&semi; Kickbacks&colon;<&sol;strong> The marketers then transmit the beneficiary information and specimen to entities that arrange for physician orders&comma; typically through telemedicine platforms&period; Physicians or other practitioners&comma; often having no prior relationship with the patient and conducting minimal or no consultation&comma; sign the orders for the expensive genetic tests in exchange for kickbacks paid by the telemedicine company or marketers&period; These orders lack a basis in medical necessity&period;  <&sol;li>&NewLine;&NewLine;&NewLine;&NewLine;<li><strong>Laboratory Billing&colon;<&sol;strong> The specimens and illicitly obtained orders are sent to participating laboratories&comma; which perform the tests &lpar;or claim to&rpar; and submit high-dollar claims to Medicare for reimbursement&period; Sometimes labs are chosen based on higher reimbursement rates in certain geographic areas&comma; even if they lack the capability to perform the tests themselves&period;  <&sol;li>&NewLine;&NewLine;&NewLine;&NewLine;<li><strong>Sharing the Proceeds&colon;<&sol;strong> Once Medicare pays the claim&comma; the laboratory shares the proceeds by paying kickbacks back to the marketers&comma; telemedicine companies&comma; and sometimes the ordering physicians&comma; completing the fraudulent cycle&period;  <&sol;li>&NewLine;<&sol;ol>&NewLine;<&sol;li>&NewLine;&NewLine;&NewLine;&NewLine;<li><strong>Government Warnings and Resources<&sol;strong> In response to this pervasive fraud&comma; federal agencies have issued numerous warnings and provided resources&colon;&NewLine;<ul class&equals;"wp-block-list">&NewLine;<li><strong>HHS-OIG Fraud Alerts&colon;<&sol;strong> OIG has published specific Fraud Alerts warning the public&comma; particularly Medicare beneficiaries&comma; about genetic testing scams&comma; advising them to be suspicious of &&num;8220&semi;free&&num;8221&semi; offers&comma; to protect their Medicare numbers&comma; and to only get tests ordered by their trusted treating physician&period;  <&sol;li>&NewLine;&NewLine;&NewLine;&NewLine;<li><strong>Senior Medicare Patrol &lpar;SMP&rpar;&colon;<&sol;strong> This national program&comma; funded by the Administration for Community Living&comma; educates beneficiaries on how to prevent&comma; detect&comma; and report Medicare fraud&comma; including genetic testing schemes&period; SMP resources often provide specific red flags and reporting guidance&period;  <&sol;li>&NewLine;&NewLine;&NewLine;&NewLine;<li><strong>CMS Healthcare <a href&equals;"https&colon;&sol;&sol;www&period;fraudswatch&period;com&sol;comprehensive-financial-fraud-prevention-detection&sol;" data-wpil-monitor-id&equals;"1426">Fraud Prevention<&sol;a> Partnership &lpar;HFPP&rpar;&colon;<&sol;strong> This public-private partnership has also addressed genetic testing fraud&comma; issuing a white paper in 2020 outlining schemes and detection strategies&period;  <&sol;li>&NewLine;<&sol;ul>&NewLine;<&sol;li>&NewLine;&NewLine;&NewLine;&NewLine;<li><strong>Recent Enforcement Trends<&sol;strong> Beyond the large-scale takedowns focused on the marketing&sol;telemedicine&sol;lab kickback model&comma; enforcement trends in the genetic testing space are evolving&colon;&NewLine;<ul class&equals;"wp-block-list">&NewLine;<li><strong>Scrutiny of Sponsored Testing Programs&colon;<&sol;strong> The government is increasingly examining arrangements where pharmaceutical or device manufacturers sponsor &&num;8220&semi;free&&num;8221&semi; genetic testing programs related to their products&period; While potentially beneficial for identifying patients with rare diseases&comma; these programs carry AKS risks if they function as disguised kickbacks to induce prescriptions of the sponsor&&num;8217&semi;s drug&period; OIG Advisory Opinions 22-06 and 24-12 provide guidance on structuring compliant programs&comma; emphasizing safeguards against overutilization&comma; ensuring tests don&&num;8217&semi;t dictate prescribing decisions&comma; and preventing the program from being used as a marketing tool&period; Recent multi-million dollar settlements &lpar;e&period;g&period;&comma; Ultragenyx &dollar;6M &comma; QOL Medical &dollar;47M &rpar; and ongoing investigations &lpar;e&period;g&period;&comma; BioMarin subpoena &rpar; signal this is a key area of focus&period; The government scrutinizes whether test results are shared with sales teams or if eligibility criteria are sufficiently objective&period;  <&sol;li>&NewLine;&NewLine;&NewLine;&NewLine;<li><strong>Leveraging Data Analytics&colon;<&sol;strong> DOJ&comma; OIG&comma; and CMS are investing heavily in advanced data analytics&comma; including <a href&equals;"https&colon;&sol;&sol;www&period;fraudswatch&period;com&sol;google-ai-secrets-at-risk-linwei-ding-faces-14-counts-of-espionage-and-trade-secret-theft-in-china-scheme&sol;" data-wpil-monitor-id&equals;"1427">artificial intelligence<&sol;a> &lpar;AI&rpar; and machine learning &lpar;ML&rpar;&comma; to proactively identify potential fraud&period; These tools analyze vast amounts of claims data to detect aberrant billing patterns&comma; statistical outliers&comma; and suspicious relationships between providers&comma; labs&comma; and marketers&comma; enabling investigators to target high-risk areas like genetic testing and telehealth more effectively&period; This shift towards data-driven enforcement means providers with unusual billing practices are more likely to face scrutiny&comma; even without a whistleblower complaint&period;  <&sol;li>&NewLine;<&sol;ul>&NewLine;<&sol;li>&NewLine;&NewLine;&NewLine;&NewLine;<li><strong>Multi-Faceted Enforcement and Adaptability of Fraud<&sol;strong> The government&&num;8217&semi;s approach to combating genetic testing fraud is multi-pronged&comma; involving not just criminal prosecutions and civil settlements under the FCA&sol;AKS&comma; but also proactive measures like public education via fraud alerts &comma; administrative actions by CMS &lpar;such as payment suspensions or provider enrollment revocations&rpar; often taken concurrently with law enforcement actions &comma; and the aforementioned use of data analytics for early detection&period; This comprehensive strategy aims to disrupt schemes early&comma; recover stolen funds&comma; punish wrongdoers&comma; and deter future fraud&period;   However&comma; the underlying structure of many of these fraud schemes – involving aggressive marketing&comma; kickbacks&comma; and the misuse of telemedicine to generate orders for high-value services – is highly adaptable&period; While genetic testing is a current focus due to its complexity and high reimbursement rates&comma; the same model has been applied to durable medical equipment &lpar;DME&rpar;&comma; particularly orthotic braces &lpar;as seen in Operation Brace Yourself &rpar;&comma; compounded creams &comma; and other laboratory tests&period; As enforcement pressure mounts on genetic testing&comma; it is likely that fraudulent actors will pivot to exploit other services or items using similar tactics&period; This necessitates a compliance approach focused on the <em>methods<&sol;em> of fraud &lpar;kickbacks&comma; lack of medical necessity&comma; improper use of marketing and telemedicine&rpar; rather than solely on specific <em>types<&sol;em> of services&period;  <&sol;li>&NewLine;<&sol;ul>&NewLine;&NewLine;&NewLine;&NewLine;<h2 id&equals;"the-whistleblower8217s-role-uncovering-fraud-through-qui-tam-lawsuits" class&equals;"rb-heading-index-4-105404 wp-block-heading">The Whistleblower&&num;8217&semi;s Role&colon; Uncovering Fraud Through Qui Tam Lawsuits<&sol;h2>&NewLine;&NewLine;&NewLine;&NewLine;<p>The Genexe settlement&comma; like a significant portion of healthcare fraud recoveries&comma; originated from lawsuits filed by private individuals known as whistleblowers or <em>qui tam<&sol;em> relators&period; The False Claims Act&&num;8217&semi;s <em>qui tam<&sol;em> provisions are a cornerstone of the government&&num;8217&semi;s anti-fraud efforts&comma; creating a powerful mechanism for uncovering misconduct that might otherwise remain hidden&period;<&sol;p>&NewLine;&NewLine;&NewLine;&NewLine;<ul class&equals;"wp-block-list">&NewLine;<li><strong>Introduction to <em>Qui Tam<&sol;em> Lawsuits<&sol;strong> The term <em>qui tam<&sol;em> is derived from the Latin phrase &&num;8220&semi;qui tam pro domino rege quam pro se ipso in hac parte sequitur&comma;&&num;8221&semi; meaning &&num;8220&semi;he who brings an action for the king as well as for himself&&num;8221&semi;&period; The FCA allows private citizens &lpar;relators&rpar; who have knowledge of fraud against the government to file a civil lawsuit on behalf of the United States&period; The relator does not need to have suffered personal harm from the fraud&period; If the lawsuit is successful in recovering government funds&comma; the relator is entitled to receive a share of the recovery as a reward&period;  <&sol;li>&NewLine;&NewLine;&NewLine;&NewLine;<li><strong>The <em>Qui Tam<&sol;em> Process<&sol;strong> Filing and pursuing a <em>qui tam<&sol;em> lawsuit under the FCA involves specific procedural steps mandated by the statute&colon;&NewLine;<ol class&equals;"wp-block-list">&NewLine;<li><strong>Filing Under Seal&colon;<&sol;strong> The relator&comma; who must be represented by an attorney &comma; files the complaint in federal district court <em>under seal<&sol;em>&period; This means the lawsuit is kept confidential – it is not served on the defendant&comma; and its existence is not made public&period; Only the relator&comma; their counsel&comma; the assigned judge&comma; and the government are initially aware of the filing&period;  <&sol;li>&NewLine;&NewLine;&NewLine;&NewLine;<li><strong>Service on the Government &amp&semi; Disclosure&colon;<&sol;strong> Concurrently with filing&comma; the relator must serve a copy of the complaint and a separate &&num;8220&semi;written disclosure of substantially all material evidence and information&&num;8221&semi; they possess regarding the alleged fraud upon both the U&period;S&period; Attorney General in Washington&comma; D&period;C&period;&comma; and the U&period;S&period; Attorney for the district where the case is filed&period; This disclosure provides the government with the factual basis for the allegations&period;  <&sol;li>&NewLine;&NewLine;&NewLine;&NewLine;<li><strong>Government Investigation Period&colon;<&sol;strong> The FCA grants the government an initial 60-day period &lpar;from the date of service and disclosure&rpar; during which the case remains under seal while the DOJ investigates the relator&&num;8217&semi;s allegations&period; The government frequently requests&comma; and courts typically grant&comma; extensions of this seal period&comma; often for months or even years&comma; particularly in complex cases&comma; upon showing &&num;8220&semi;good cause&&num;8221&semi; &lpar;e&period;g&period;&comma; the need for further investigation&rpar;&period; During this time&comma; the government may use tools like Civil Investigative Demands &lpar;CIDs&rpar; to gather evidence&period;  <&sol;li>&NewLine;&NewLine;&NewLine;&NewLine;<li><strong>Intervention Decision&colon;<&sol;strong> At the conclusion of its investigation &lpar;or the seal period&rpar;&comma; the government must notify the court whether it will &&num;8220&semi;intervene&&num;8221&semi; in the case&period;&NewLine;<ul class&equals;"wp-block-list">&NewLine;<li><strong>Intervention&colon;<&sol;strong> If the government intervenes&comma; it assumes primary responsibility for prosecuting the lawsuit&period; The relator remains a party to the action but typically plays a supporting role&comma; although they have rights to participate and object to dismissal or settlement&period; The government intervenes in a minority of cases &lpar;historically around 20-25&percnt;&rpar;&period;  <&sol;li>&NewLine;&NewLine;&NewLine;&NewLine;<li><strong>Declination&colon;<&sol;strong> If the government declines to intervene&comma; the relator has the right to pursue the lawsuit independently on behalf of the United States&period; The government can still monitor the case&comma; potentially receive a share of any recovery&comma; and must consent to dismissal&period; The government also retains the right to intervene later upon showing good cause&period;  <&sol;li>&NewLine;&NewLine;&NewLine;&NewLine;<li><strong>Dismissal&sol;Settlement&colon;<&sol;strong> The government may also seek to dismiss the case or settle it during the seal period&period;  <&sol;li>&NewLine;<&sol;ul>&NewLine;<&sol;li>&NewLine;&NewLine;&NewLine;&NewLine;<li><strong>Unsealing and Litigation&colon;<&sol;strong> Once the government makes its intervention decision&comma; the complaint is typically unsealed&comma; and the case becomes public record&period; The relator &lpar;or the government&comma; if intervening&rpar; then serves the complaint on the defendant&lpar;s&rpar;&comma; and the litigation proceeds according to the Federal Rules of Civil Procedure&comma; potentially involving discovery&comma; motions&comma; settlement negotiations&comma; or trial&period;  <&sol;li>&NewLine;<&sol;ol>&NewLine;<&sol;li>&NewLine;&NewLine;&NewLine;&NewLine;<li><strong>The Relator&&num;8217&semi;s Share&colon; Incentivizing Whistleblowing<&sol;strong> A key driver of the <em>qui tam<&sol;em> system is the financial reward offered to successful relators&colon;&NewLine;<ul class&equals;"wp-block-list">&NewLine;<li><strong>Percentage Range&colon;<&sol;strong> The FCA mandates a relator share based on the government&&num;8217&semi;s recovery&colon;&NewLine;<ul class&equals;"wp-block-list">&NewLine;<li><strong>Government Intervention&colon;<&sol;strong> If the government intervenes&comma; the relator receives between <strong>15&percnt; and 25&percnt;<&sol;strong> of the proceeds recovered&period; The minimum 15&percnt; is often considered a &&num;8220&semi;finder&&num;8217&semi;s fee&&num;8221&semi; for bringing the case&period;  <&sol;li>&NewLine;&NewLine;&NewLine;&NewLine;<li><strong>Government Declination&colon;<&sol;strong> If the government declines intervention and the relator successfully prosecutes the case alone&comma; the relator receives a higher share&comma; between <strong>25&percnt; and 30&percnt;<&sol;strong> of the proceeds&period;  <&sol;li>&NewLine;<&sol;ul>&NewLine;<&sol;li>&NewLine;&NewLine;&NewLine;&NewLine;<li><strong>Factors Influencing Share&colon;<&sol;strong> The exact percentage within these ranges is typically negotiated between the relator&&num;8217&semi;s counsel and the DOJ&comma; or determined by the court if they cannot agree&period; Factors influencing the share include&colon; the significance of the information provided by the relator&semi; the relator&&num;8217&semi;s contribution to the investigation and prosecution &lpar;including assistance from counsel&rpar;&semi; whether the relator reported promptly or attempted to stop the fraud internally&semi; the extent of the relator&&num;8217&semi;s knowledge&semi; and whether the government learned of the fraud independently&period; In practice&comma; shares in intervened cases often fall between 18-22&percnt;&period;  <&sol;li>&NewLine;&NewLine;&NewLine;&NewLine;<li><strong>Potential Reductions&colon;<&sol;strong> The court may reduce the relator&&num;8217&semi;s share&comma; potentially below the standard minimums &lpar;e&period;g&period;&comma; to no more than 10&percnt; if based primarily on public information&comma; unless the relator is an &&num;8220&semi;original source&&num;8221&semi;&rpar; or even eliminate it entirely if the relator &&num;8220&semi;planned and initiated&&num;8221&semi; the underlying fraud or is criminally convicted for their role in the fraud&period;  <&sol;li>&NewLine;&NewLine;&NewLine;&NewLine;<li><strong>Genexe Example&colon;<&sol;strong> The approximately &dollar;1&period;3 million awarded to the four relators in the Genexe case from the &dollar;6 million settlement &lpar;around 21&period;7&percnt;&rpar; serves as a real-world example of a relator share determination within the 15-25&percnt; range for an intervened case&period;  <&sol;li>&NewLine;<&sol;ul>&NewLine;<&sol;li>&NewLine;&NewLine;&NewLine;&NewLine;<li><strong>The Importance of Whistleblowers in Combating Healthcare Fraud<&sol;strong> The <em>qui tam<&sol;em> mechanism is widely recognized as essential to the government&&num;8217&semi;s success in fighting healthcare fraud&colon;&NewLine;<ul class&equals;"wp-block-list">&NewLine;<li><strong>Uncovering Hidden Fraud&colon;<&sol;strong> Whistleblowers&comma; often current or former employees&comma; contractors&comma; or competitors&comma; possess insider knowledge of complex fraudulent schemes that government auditors or investigators might never discover on their own&period; They provide the crucial initial information and often critical evidence needed to build a case&period;  <&sol;li>&NewLine;&NewLine;&NewLine;&NewLine;<li><strong>Driving Significant Recoveries&colon;<&sol;strong> A substantial majority of FCA recoveries&comma; particularly in the healthcare sector&comma; stem from cases initiated by whistleblowers&period; Billions of dollars are returned to federal programs like Medicare and Medicaid each year thanks to <em>qui tam<&sol;em> actions&period; Since the FCA amendments in 1986 strengthened the <em>qui tam<&sol;em> provisions&comma; whistleblower cases have led to the recovery of over &dollar;46&period;5 billion through FY 2020 alone &comma; with total FCA recoveries &lpar;including government-initiated cases&rpar; exceeding &dollar;78 billion since 1986&period;  <&sol;li>&NewLine;&NewLine;&NewLine;&NewLine;<li><strong>Protecting Patients&colon;<&sol;strong> Beyond financial recoveries&comma; healthcare whistleblowers play a vital role in protecting patient safety and welfare&period; By exposing schemes involving medically unnecessary procedures or tests &lpar;like the genetic tests in the Genexe case&rpar;&comma; substandard care&comma; or dangerous prescribing practices&comma; they help stop practices that can directly harm vulnerable patients&period;  <&sol;li>&NewLine;<&sol;ul>&NewLine;<&sol;li>&NewLine;&NewLine;&NewLine;&NewLine;<li><strong>Whistleblower Protections<&sol;strong> Recognizing the personal and professional risks whistleblowers often take&comma; the FCA includes anti-retaliation provisions&period; These protect employees&comma; contractors&comma; and agents from being discharged&comma; demoted&comma; suspended&comma; threatened&comma; harassed&comma; or otherwise discriminated against in their employment because of lawful actions taken in furtherance of an FCA case &lpar;e&period;g&period;&comma; investigating&comma; reporting&comma; filing&comma; or testifying&rpar;&period; Relators who suffer retaliation can file a separate lawsuit seeking remedies such as reinstatement&comma; double back pay with interest&comma; compensation for special damages &lpar;like emotional distress&rpar;&comma; and attorney&&num;8217&semi;s fees and costs&period;  <&sol;li>&NewLine;&NewLine;&NewLine;&NewLine;<li><strong>The Public-Private Partnership and Reporting Incentives<&sol;strong> The <em>qui tam<&sol;em> system functions as a unique and highly effective public-private partnership&period; The government essentially outsources a significant portion of its <a href&equals;"https&colon;&sol;&sol;www&period;fraudswatch&period;com&sol;who-is-legally-responsible-for-credit-card-scam&sol;" data-wpil-monitor-id&equals;"1428">fraud<&sol;a> detection and initial investigation efforts to private citizens and their legal counsel&comma; incentivized by the potential for a substantial financial reward&period; This model dramatically expands the government&&num;8217&semi;s enforcement reach far beyond what would be possible with its own limited resources&period; The structure of the FCA&comma; particularly the &&num;8220&semi;first-to-file&&num;8221&semi; rule &comma; which generally bars subsequent lawsuits based on the same facts as an earlier-filed case&comma; creates a powerful incentive for whistleblowers to report fraud promptly&period; Delaying reporting carries the risk that another individual with the same information might file first&comma; potentially precluding the later filer from pursuing the case or receiving a reward&period; This encourages timely disclosure&comma; allowing the government to intervene sooner and potentially mitigate ongoing financial losses and patient harm&period; The continued success and high volume of <em>qui tam<&sol;em> filings underscore the vital role of these provisions&comma; despite periodic legal challenges to their constitutionality&period;  <&sol;li>&NewLine;<&sol;ul>&NewLine;&NewLine;&NewLine;&NewLine;<h2 id&equals;"conclusion-lessons-from-genexe-and-the-path-forward-for-compliance" class&equals;"rb-heading-index-5-105404 wp-block-heading">Conclusion&colon; Lessons from Genexe and the Path Forward for Compliance<&sol;h2>&NewLine;&NewLine;&NewLine;&NewLine;<p>The &dollar;6 million settlement involving Genexe&comma; Immerge&comma; and its executives serves as a potent reminder of the significant legal and financial risks associated with non-compliance in the complex U&period;S&period; healthcare system&period; 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&comma; the case offers critical lessons for various stakeholders in the healthcare industry&period;<sup><&sol;sup> &nbsp&semi;<&sol;p>&NewLine;&NewLine;&NewLine;&NewLine;<ul class&equals;"wp-block-list">&NewLine;<li><strong>Recap of the Genexe Settlement<&sol;strong> Genexe&comma; LLC&comma; its parent Immerge&comma; Inc&period;&comma; CEO Jason Green&comma; and COO Jason Gross agreed to pay &dollar;6 million to resolve federal allegations&period; The government contended that between mid-2018 and late 2019&comma; the defendants orchestrated a scheme where marketers &lpar;IBOs&rpar; were paid kickbacks to recruit Medicare beneficiaries for CGx and PGx tests&period; Telemedicine providers&comma; also allegedly receiving kickbacks&comma; then provided physician orders for these tests&comma; which lacked medical necessity&period; The resulting claims submitted to Medicare were deemed false under the FCA&comma; both due to the lack of medical necessity and the underlying AKS violations&period; Genexe also allegedly received kickbacks from the laboratories processing the tests&period; The settlement resolved these allegations&comma; which were initially brought forward in two separate <em>qui tam<&sol;em> lawsuits filed by whistleblowers who collectively received approximately &dollar;1&period;3 million of the recovery&period;  <&sol;li>&NewLine;&NewLine;&NewLine;&NewLine;<li><strong>Key Takeaways from the Case<&sol;strong> Several crucial points emerge from this settlement&colon;&NewLine;<ul class&equals;"wp-block-list">&NewLine;<li><strong>Marketing Entities Under Scrutiny&colon;<&sol;strong> Companies functioning primarily as marketing or lead generation operations within the healthcare space&comma; along with their leadership&comma; are clearly subject to intense scrutiny and potential liability under fraud and abuse laws&period; Business models relying on payments tied to referrals are inherently risky&period;  <&sol;li>&NewLine;&NewLine;&NewLine;&NewLine;<li><strong>Telemedicine and Genetic Testing Vulnerabilities&colon;<&sol;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&period;  <&sol;li>&NewLine;&NewLine;&NewLine;&NewLine;<li><strong>Dual Compliance Focus &lpar;FCA &amp&semi; AKS&rpar;&colon;<&sol;strong> Adherence to <em>both<&sol;em> the FCA&&num;8217&semi;s requirements &lpar;truthful claims&comma; documented medical necessity&rpar; and the AKS&&num;8217&semi;s prohibition on improper remuneration is essential&period; Violating one often leads to violations of the other&period;  <&sol;li>&NewLine;&NewLine;&NewLine;&NewLine;<li><strong>Whistleblower Impact&colon;<&sol;strong> The resolution underscores the continuing effectiveness of the FCA&&num;8217&semi;s <em>qui tam<&sol;em> provisions in enabling private individuals to expose significant fraud&period;  <&sol;li>&NewLine;<&sol;ul>&NewLine;<&sol;li>&NewLine;&NewLine;&NewLine;&NewLine;<li><strong>Broader Implications and Compliance Imperatives<&sol;strong> The Genexe case and the broader enforcement trends discussed offer critical compliance guidance for various healthcare industry participants&colon;&NewLine;<ul class&equals;"wp-block-list">&NewLine;<li><strong>For Laboratories&colon;<&sol;strong> Robust compliance programs are essential&period; Labs must implement procedures to carefully scrutinize incoming test orders&comma; particularly high volumes originating from unfamiliar telemedicine sources or entities known to be associated with marketing campaigns&period; They need mechanisms to verify ordering provider credentials and&comma; where possible&comma; assess the plausibility of medical necessity based on available information and NCD&sol;LCD criteria&period; Maintaining clear documentation trails and avoiding any financial arrangements with referral sources that could be construed as kickbacks &lpar;including payments <em>from<&sol;em> the lab <em>to<&sol;em> marketers or referring entities&rpar; is paramount&period;  <&sol;li>&NewLine;&NewLine;&NewLine;&NewLine;<li><strong>For Physicians and Other Ordering Practitioners&colon;<&sol;strong> Strict adherence to clinical standards and Medicare&&num;8217&semi;s &&num;8220&semi;reasonable and necessary&&num;8221&semi; requirements is non-negotiable&period; Providers must establish a legitimate treating relationship with patients before ordering tests and ensure the tests are appropriate for the patient&&num;8217&semi;s specific condition and will be used in their medical management&period; Engaging in arrangements with telemedicine or marketing companies that involve compensation based on the volume of orders generated&comma; or that pressure providers to order specific items without independent clinical judgment&comma; carries extreme risk under the AKS and FCA&period;  <&sol;li>&NewLine;&NewLine;&NewLine;&NewLine;<li><strong>For Marketing and Telemedicine Companies&colon;<&sol;strong> Entities operating in these spaces within healthcare must prioritize compliance with the AKS and FCA above aggressive sales tactics&period; Paying or receiving compensation tied directly or indirectly to the volume or value of referrals or business generated for federal healthcare programs is prohibited&period; Telemedicine encounters must meet established clinical and ethical standards&comma; ensuring a valid provider-patient relationship is formed and documented&period; Business arrangements should be carefully structured&comma; ideally seeking guidance from experienced healthcare counsel to ensure compliance&comma; potentially utilizing AKS safe harbors where applicable&period; Companies entering healthcare from other industries must recognize its unique regulatory environment and invest in specialized compliance infrastructure&period;  <&sol;li>&NewLine;&NewLine;&NewLine;&NewLine;<li><strong>Universal Need for Robust Compliance&colon;<&sol;strong> Across the board&comma; healthcare organizations must invest in and maintain effective compliance programs&period; This includes conducting regular risk assessments tailored to their specific operations&comma; implementing clear policies and procedures&comma; providing ongoing staff training&comma; performing regular audits and monitoring&comma; establishing confidential channels for internal reporting of potential issues&comma; and conducting thorough due diligence on all third-party vendors and partners&comma; especially those involved in marketing&comma; billing&comma; or clinical service delivery&period;  <&sol;li>&NewLine;<&sol;ul>&NewLine;<&sol;li>&NewLine;&NewLine;&NewLine;&NewLine;<li><strong>Government Commitment and Future Outlook<&sol;strong> The Genexe settlement reinforces the unwavering commitment of the DOJ and HHS-OIG to combatting fraud&comma; waste&comma; and abuse within federal healthcare programs&period; Agencies continue to refine their strategies&comma; employing powerful legal tools like the FCA and AKS&comma; leveraging sophisticated data analytics for proactive detection &comma; and relying heavily on the crucial information provided by whistleblowers through the <em>qui tam<&sol;em> process&period; As healthcare delivery models evolve&comma; particularly with the growth of telemedicine and advanced diagnostics like genetic testing&comma; enforcement efforts will adapt to address emerging fraud schemes&period;   Navigating the complex web of healthcare regulations demands constant vigilance and a proactive commitment to ethical conduct and compliance&period; Settlements like the one involving Genexe underscore the severe financial and reputational consequences of failure&period; This report&comma; by dissecting the case and its context&comma; 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&period;<&sol;li>&NewLine;<&sol;ul>&NewLine;&NewLine;&NewLine;&NewLine;<h2 id&equals;"contact-information" class&equals;"rb-heading-index-6-105404 wp-block-heading">Contact Information<&sol;h2>&NewLine;&NewLine;&NewLine;&NewLine;<p>For media inquiries or further information regarding this report&comma; please contact&colon; Assistant United States Attorney Mark J&period; Sherer and Auditor Denis J&period; Cooke&period;<&sol;p>&NewLine;&NewLine;&NewLine;&NewLine;<p><a href&equals;"mailto&colon;USAPAE&period;PressBox&commat;usdoj&period;gov">USAPAE&period;PressBox&commat;usdoj&period;gov<&sol;a><&sol;p>&NewLine;&NewLine;&NewLine;&NewLine;<p> 215-861-8300 <&sol;p>&NewLine;&NewLine;&NewLine;&NewLine;<p><&sol;p>&NewLine;

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