DNA Testing Company Settles Health Care Fraud Allegations for $42.6 Million, Banned From Federal Programs for 25 Years

Louisiana genetic testing company UTC Laboratories Inc. has agreed to pay $42.6 million in a settlement that will resolve allegations of violating the False Claims Act. According to a statement from the Department of Justice dated October 9, UTC had allegedly paid kickbacks for lab referrals and billed for testing that was not medically necessary.

UTC, also known as RenRX, agreed not to be included in any federal health care program for 25 years.

Between 2013 and 2017, UTC allegedly paid physicians to order pharmacogenetic testing, which studies how an individual is affected by drugs. The National Institute of Health says the aim of pharmacogenetics is "to develop effective, safe medications and doses that will be tailored to a person's genetic makeup."

In return, patients were allegedly recruited to take part in genetic testing for the Diagnosing Adverse Drug Reactions Registry (DART). The study required patients to have DNA testing done via buccal swab, which collects genetic material from the inside of a patient's cheek.

Government allegations were that UTC Laboratories billed Medicare for these unnecessary tests and paid money, including sales commissions, to those involved with the plan.

DNA, genetics, testing
Louisiana genetics lab UTC Laboratories agreed not to be included in federal healthcare programs for 25 years. Getty

"The payment of kickbacks in exchange for medical referrals undermines the integrity of our healthcare system," said Assistant Attorney General Jody Hunt of the Department of Justice's Civil Division. "Today's settlement reflects the Department of Justice's commitment to ensuring that taxpayer monies are well spent and not wasted on unnecessary medical testing."

The three principals of UTC Laboratories also agreed to pay $1 million as part of the settlement.

The False Claims Act (FCA) says that anyone who is liable for attempting to receive money from the government fraudulently must be aware that the information submitted to obtain payment is false.

The settlement involves allegations in six lawsuits filed in Louisiana under the whistleblower provisions of the FCA. These provisions allow private citizens to file suit and share in any monies recovered.

This past September, charges were handed down in a healthcare fraud case that affected patients in Florida and Mississippi. WDAM reported that over $515 million was fraudulently obtained from Medicare, Medicaid and TRICARE.

Wade Ashley Walters was indicted on 37 counts, including conspiracy to commit healthcare fraud, soliciting and receiving monetary kickbacks and the possession and sale of controlled substances.

If convicted of all charges, Walters could receive over 500 years in federal prison.

"Fraud against our nation's vital federal health care programs amounts to theft from American taxpayers," said Assistant Attorney General Brian A. Benczkowski of the Justice Department's Criminal Division.