Medicare did not cover CGx testing for beneficiaries who did not have cancer or lacked symptoms of cancer. Where a CGx test was procured through the payment of a kickback in violation of federal law, a claim to Medicare for reimbursement for such test was fraudulent.
Daniel Hurt, the owner and/or operator of Fountain Health Services LLC, Verify Health, Landmark Diagnostics LLC, First Choice Laboratory LLC, and Sonoran Desert Pathology Associates LLC, has reached an agreement to pay more than $27 million to settle claims that he and his companies participated in a scheme to defraud Medicare by submitting false claims for cancer genomic (CGx) tests that were unnecessary and obtained through illegal kickbacks.
Cancer genomic (“CGx”) testing used DNA sequencing to detect mutations in genes that could indicate a higher risk of developing certain types of cancers in the future. CGx testing was not a method of diagnosing whether an individual presently had cancer. Because CGx testing did not diagnose cancer, Medicare only covered the costs associated with such tests in limited circumstances, including when a beneficiary had cancer and the beneficiary’s treating physician deemed such testing necessary for the beneficiary’s treatment of that cancer. Medicare did not cover CGx testing for beneficiaries who did not have cancer or lacked symptoms of cancer. Where a CGx test was procured through the payment of a kickback in violation of federal law, a claim to Medicare for reimbursement for such test was fraudulent.
As part of the settlement, Hurt, Fountain Health, Verify Health, Landmark Diagnostics, First Choice, and Sonoran Desert Pathology will be excluded from participation in Medicare, Medicaid, and other Federal health care programs by the Department of Health and Human Services Office of Inspector General (HHS-OIG). Hurt has also previously pleaded guilty to criminal healthcare fraud related to these actions. The settlement amount was determined based on Hurt's financial ability to pay.
“We will not tolerate those who prey on older Americans to defraud Medicare,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “As this settlement reflects, we will use our available resources to protect federal health care programs and the beneficiaries they serve.”
The United States claimed that Hurt, his companies, and others colluded to submit false claims for CGx tests that were not needed for medical purposes. Additionally, Hurt was accused of giving and receiving kickbacks in exchange for Medicare referrals, which goes against the Anti-Kickback Statute.
Specifically, it was alleged that from January 2019 to November 2021, Hurt worked with telemarketing agents to target Medicare beneficiaries for unnecessary CGx tests, collaborated with telemedicine providers to prescribe these tests, coordinated with reference laboratories to conduct the tests, and partnered with billing laboratories and a hospital to submit claims for payment to the Centers for Medicare and Medicaid Services.
Telemedicine was a means of connecting patients to doctors by using telecommunications technology, such as the internet or telephone, to allow a doctor to interact with a patient. Telemedicine companies provided telemedicine services to individuals by hiring doctors and other health care providers, who were paid a per-consult fee to conduct remote consultations with patients.
Medicare Part B covered expenses for specified telemedicine services but only when certain requirements were met. These requirements included that (a) the beneficiary was located in a rural or health professional shortage area; (b) services were delivered via an interactive audio and video telecommunications system; and (c) the beneficiary was at a practitioner’s office or a specified medical facility—not at a beneficiary’s home—during the telemedicine consultation with a remote practitioner.
“Unnecessary medical services and false claims for medical services threaten patients and our public health programs,” said U.S. Attorney Roger B. Handberg for the Middle District of Florida. “This civil settlement demonstrates our commitment to protecting patients from unnecessary testing and our healthcare institutions from fraudulent billing.”
“Our office is committed to pursuing those who threaten our government healthcare programs by submitting false claims for medically unnecessary services that are tainted by unlawful payments to marketers,” said U.S. Attorney Markenzy Lapointe for the Southern District of Florida. “As these schemes become more complex and cross district lines, we will continue to work and coordinate with our law enforcement partners and other districts to ensure vigorous enforcement of the law.”
In this settlement, three cases filed under the qui tam or whistleblower provisions of the FCA have been resolved. One of these cases was brought by Robert Gerstein, a minority owner of Sonoran Desert Pathology, where he was responsible for overseeing the billing operations for CGx tests. The FCA allows private individuals to file actions on behalf of the United States and receive a share of any monetary recovery. As part of today's resolution, Relator Gerstein will be entitled to receive a maximum of $4.7 million or 17% of the government's recovery.
“Medicare and Medicaid are two vitally important health care programs that provide critical services to millions of Americans,” said U.S. Attorney Philip R. Sellinger for the District of New Jersey. “Schemes that seek to siphon money from these programs with unnecessary medical tests are especially egregious. We will do everything we can to protect the public and the services they need, and to hold accountable those who try to bilk the system.”
“Submitting false claims for medically unnecessary services to Medicare and Medicaid jeopardizes the integrity of vital health care programs, and we, along with our law enforcement partners, will continue to make sure those who attempt to do so are held accountable,” stated Deputy Inspector General of Investigations Christian J. Schrank of HHS-OIG. “This substantial settlement underscores our steadfast dedication to safeguarding federal health care programs.”
The successful outcome in this case was achieved through a collaborative approach involving various departments within the Justice Department, including the Civil Division, Commercial Litigation Branch, Fraud Section, Corporate/Financial Litigation Section, as well as the U.S. Attorney’s Offices for the Middle District of Florida, Southern District of Florida, and District of New Jersey, with support from HHS-OIG.
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