North Carolina testing laboratory settled whistleblower’s allegations for up to $43 million

by Ben Vernia | April 27th, 2020

On April 27, the Department of Justice announced that Asheville, North Carolina-based Genova Diagnostics, Inc., has agreed to pay as much as $43 million to resolve civil claims, originally brought by a whistleblower, that the firm submitted false claims to federal healthcare programs for medically unnecessary laboratory tests. According to DOJ’s press release:

Genova Diagnostics Inc., a clinical laboratory services company based in Asheville, North Carolina, has agreed to pay up to approximately $43 million to resolve allegations that it violated the False Claims Act, including claims that it billed  for medically unnecessary lab tests, the Department of Justice announced today.

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The settlement resolves allegations that Genova: (a) improperly submitted claims to Medicare, TRICARE, and the federal employee health program for its IgG allergen, NutrEval and GI Effects lab test profiles because the tests were not medically necessary, (b) engaged in improper billing techniques, and (c) paid compensation to three phlebotomy vendors that violated the physician self-referral prohibition commonly known as the Stark Law.  The Stark Law is intended to ensure that physician referrals are determined by the medical needs of patients and not the financial interests of physicians.

Under the settlement, Genova has agreed to pay approximately $17 million, through the surrender of claim funds held in suspension by Medicare and TRICARE, plus up to an additional $26 million if certain financial contingencies occur within the next five years, for a total potential payment of up to $43 million. 

Contemporaneous with the civil settlement, Genova entered into a five-year Corporate Integrity Agreement (CIA) with the Department of Health and Human Services Office of Inspector General.  The CIA requires, among other things, that Genova establish and maintain a compliance program with specific requirements and that it engage an independent review organization.

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The whistleblower will receive up to $6 million of the settlement (a x% relators’s share), DOJ announced.

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