New Orleans-based UTC Laboratories Inc. has agreed to pay $42.6 million to settle a group of whistleblower lawsuits that accused the genetics testing company of engaging in illegal kickback schemes and billing Medicare for medically unnecessary tests.

The terms of the settlement also impose a 25-year ban from participating in Medicare or any other federal health care program, the U.S. Department of Justice (DOJ) said in a statement.

Six whistleblower lawsuits accused UTC Laboratories of violating the U.S. False Claims Act. The Act allows private parties to sue on behalf of the U.S. in cases of credible and well-documented fraud committed against a federal program or agency.

The DOJ investigated the whistleblowers’ claims and chose to intervene, becoming an active litigant in the case.

Federal prosecutors alleged that from 2013 to 2017, UTC Laboratories and its three principals engaged in kickback schemes in which they paid physicians to induce them to order DNA tests. The payments were disguised as remuneration for their participation in a clinical trial to create a registry of people who underwent genetic testing.

The company and its officers also offered kickbacks to other businesses and individuals, and billed Medicare for unnecessary DNA tests, federal prosecutors alleged.

DOJ officials said that UTC Laboratories’ three principals – founder Dr. Tarun Jolly, Barry Griffith and Patrick Ridgeway – will pay $1 million of the settlement, leaving UTC to pay the $41.6 million balance. The company stopped operating in 2017, citing expenses involved in the litigation of the whistleblower lawsuits. It’s likely, however, that the company was unable to remain profitable once its access to Medicare reimbursements ended.

The U.S. Department of Health and Human Services Office of Inspector General recently alerted the public that fraud schemes involving genetic testing are on the rise.

According to Reuters, federal agents raided a series of genetic testing laboratories on Sept. 27. The raids resulted in criminal charges against 35 people for alleged fraud that caused Medicare and other federal health care programs to lose about $2.1 billion.

“Healthcare fraud, in any incarnation, hurts patients, honest medical practitioners, and all of the nation’s taxpayers,” said U.S. Attorney Peter G. Strasser of the Eastern District of Louisiana.

Federal officials involved in the prosecution of the case touted their roles in the $42.6 million recovery, but ultimately the credit goes to the whistleblowers who sued UTC Laboratories on the government’s behalf. Without the information provided by the whistleblowers, it’s likely the fraud would have gone unnoticed.

Under the False Claims Act, whistleblowers receive 15% to 25% of a settlement of judgment that resulting from their False Claims Act lawsuit. The DOJ said that the whistleblowers’ share of the settlement in the UTC case was undetermined.

If you are aware of fraud being committed against the federal or state governments, you could be rewarded for reporting the fraud. If you have any questions about whether you qualify as a whistleblower, contact a lawyer at Beasley Allen for a free and confidential evaluation of your claim. Lawyers on our whistleblower litigation team are Archie Grubb, Larry Golston, Lance Gould, Paul Evans, Leslie Pescia, Leon Hampton, Tyner Helms and Lauren Miles.

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