On July 17, 2025, the Department of Justice (DOJ) and the States of Colorado, Georgia, and South Carolina announced that the former CEO and owner of a now-defunct laboratory agreed to a consent judgment of over $27.5 million under the False Claims Act (FCA), “acknowledging there is a likelihood he would be found liable in the civil action brought against him.” The government says this is in addition to $87 million in judgments and settlements that the government already obtained against other defendants named in the same suit, for a total of $114.5 million.
Specifically, the government alleged that the defendants — two clinical laboratories and several individuals associated with those laboratories — violated the FCA by paying illegal kickbacks for referrals for expensive cancer genetic (CGX) testing. The press release notes that the labs “set up tables in public spaces in low-income areas, such as bus stops, dollar stores and street corners, to target Medicaid beneficiaries” and that they falsely advertised that they were screening for cancer and enticed Medicaid beneficiaries to provide DNA samples with up to $20. According to the DOJ, the labs “would then pay a telemedicine company for a provider’s order for the CGX testing for that individual. The provider ordering the test did not have a treating relationship with the beneficiary.” The press release also notes that patients never spoke to a provider and most never received their test results.
In addition to the civil judgments, the individual defendants agreed to varying periods of exclusion. The case was the result of a whistleblower lawsuit filed under the FCA’s qui tam provisions, under which whistleblowers are entitled to between 15 and 30% of the government’s eventual recovery. The press release notes that the case was the result of a “coordinated effort” between the U.S. Attorney’s Office in South Carolina and the State Medicaid Fraud Units in Georgia, Colorado, and South Carolina.
This is the latest in a string of enforcement actions (both criminal and civil) related to CGX testing and other similar lab testing schemes. We have covered government enforcement related to CGX testing in various prior posts (here, here, and here). As noted in the government’s press release itself, this case “illustrates the government’s emphasis on combating healthcare fraud.”
____________________
The attorneys at Chilivis Grubman represent businesses and individuals — including healthcare providers such as labs — in connection with False Claims Act investigations and litigation. If you need assistance with such a matter, please contact us.