Texas Lab Settles Unnecessary Drug Testing Allegations for $6 Million

Headlines that Matter for Companies and Executives in Regulated Industries

Texas Lab Settles Unnecessary Drug Testing Allegations for $6 Million

A laboratory company based in Texas, Genotox Laboratories Ltd., recently reached an agreement with the federal government to resolve False Claims Act and Anti-Kickback Statute violations, stemming from allegations related to unnecessary drug testing claims.

The federal government alleged that, between 2014 and 2020, Genotox made illegal payments to sales contractors and marketing companies in exchange for those entities facilitating or recommending Genotox to conduct laboratory work.  Moreover, Genotox submitted false reimbursement requests to the Medicare and TRICARE programs for claims between 2014 and 2022 related to unreasonable testing and unnecessary standing orders for drug testing. Genotox also admitted that it typically billed providers at the highest amount possible for these tests.

In addition to the nearly $6 million monetary penalty, Genotox further agreed to certain other special conditions, such as maintaining a compliance program, creating and implementing a risk management program, as well as engaging an independent monitor to oversee its Medicare and Medicaid claims submissions.

Read the US Department of Justice’s (DOJ) press release here.

California Man Admits to Defrauding Medicare

On April 3, 2023, a Glendale, California, resident entered a guilty plea to charges that he conspired to defraud Medicare in the amount of over $3.1 million. Karen Sarkisyan, a.k.a. Kevin Sarkisyan, admitted to submitting false enrollment claims to Medicare on behalf of a hospice and palliative care company, while also intentionally concealing the actual identities of the company’s management and ownership. One of Sarkisyan’s co-conspirators also pled guilty to the scheme, while another was indicted but has been deemed a federal fugitive.

Read DOJ’s press release here.

Senior Leadership at Prominent Medical Device Company Charged in Fraud Scheme

A trio of c-suite level executives at Magellan Diagnostics, Inc., a Massachusetts medical device company, were charged with a conspiracy to defraud the US Food and Drug Administration based upon their purported efforts to mislead the regulatory agency and the public about its lead poisoning blood testing devices. Specifically, Magellan manufactures products which can detect the level of lead in a person’s bloodstream through either blood draws or fingersticks. According to the government, between 2013 and 2017, one of Magellan’s devices – the LeadCare II – was used in more than half of all lead poisoning tests performed in the United States.

The CEO, COO, and regulatory chief of Magellan have now all been indicted based upon allegations that they concealed a significant defect in the LeadCare products which affected the accuracy of the testing. The government alleges that the executives became aware of the devices’ issues as far back as mid-2013, and then intentionally facilitated the dissemination of false information regarding the devices’ functionality. Due to Magellan’s substantial share of the testing market from 2013 forward, the accuracy of 10s of thousands of blood lead tests conducted over the past several years could be in question.

Each defendant is facing decades in prison and substantial monetary fines.

Read DOJ’s press release here.



Continue Reading