A San Diego-based medical diagnostic laboratory will pay more than $4 million to settle claims they traded patient referrals for kickbacks to physicians and physician groups in tests that analyze risks for certain genetic diseases, U.S. District Attorney Laura E. Duffy announced Wednesday.
"Kickbacks to health care providers in exchange for patient referrals undermine the medical judgment of physicians and exploit the trust of patients," said Duffy in a statement. "Kickback arrangements with physicians also place vital taxpayer funds at risk. As this settlement demonstrates, this office will continue to aggressively combat fraud against federal health care programs."
Pathway Genomics Corporation has resolved to pay $4,036,622.74 in the civil settlement regarding the allegations. The company provides analysis of genetic testing kits for a variety of purposes, and some of their tests uses saliva samples to analyze the risk for certain genetic diseases and also to examine responsiveness of certain medications.
Pathway induced health care providers to refer Pathway testing kits and services, offering physicians and medical groups of reimbursements of up to $20 for each saliva kit they collected and submitted, according to the settlement.
"While genomic testing is a valuable and relatively recent medical tool, when specialized laboratories pay for referrals they aren't breaking any new ground but rather engaging in the same old kickback schemes," said Chris Schrank, Special Agent in Charge for the Office of Inspector General, U.S. Department of Health and Human Services Southern California Region, in a statement. "Federal law enforcement will not let new technologies deter them from bringing violators to justice."
Physicians received as much as $13,534 for their referrals, the U.S. alleges, and most physicians never ordered the costly genetic tests before enrolling in the reimbursement program. As referrals increased, Pathway billed cost of the tests to federal health care programs like Medicare and TRICARE, the U.S. alleges.
The reimbursement program has since been voluntary discontinued.
"The defendants allowed greed to corrupt their trusted relationship with their patients and ultimately affect patient care decisions," said FBI Special Agent in Charge Eric S. Birnbaum in a statement. "Today's settlement should make it abundantly clear that the FBI and our law enforcement partners will not allow kickbacks and bribes to influence patient care decisions."
A former Pathway employee first brought up the allegations.