The Justice Department on Friday said Lab Genomics LLC and its owner, Leena Dalal, agreed to pay the United States $1.25 million to settle allegations that they broke the False Claims Act by providing unlawful kickbacks to marketers.
Assistant Attorney General Brett A. Shumate of the Civil Division said, “The payment of kickbacks compromises the integrity of our healthcare programs.” U.S. Attorney Eric Grant for the Eastern District of California said it is unlawful to evade safeguards that protect federal health care programs. Acting Deputy Inspector General for Investigations Miranda L. Bennett of the Department of Health and Human Services Office of Inspector General said kickback schemes place financial incentives ahead of independent medical decision-making.
According to the department, from January 2020 through September 2022, the Fountain Valley, California, clinical laboratory and Dalal intentionally paid commissions tied to value and volume to three independent-contractor marketers to prompt them to arrange for, or recommend, that health care providers order and refer laboratory tests to Lab Genomics. The department said they organized invoices sent to the marketers to conceal the commission payments, making it seem Lab Genomics was paying flat fees.
The department explained that the Anti-Kickback Statute bars offering, paying, soliciting, or receiving money or other value to induce referrals of items or services covered by federal health care programs such as Medicare and Medicaid. Claims knowingly submitted in violation of that statute cannot be paid and may also breach the False Claims Act, the department said.
The settlement resolves certain allegations in a whistleblower lawsuit filed by Sunil Wadhwa and Ken Newton under the False Claims Act’s qui tam provisions. The department said the relators will receive $225,000 of the proceeds. The qui tam suit is titled United States ex rel. Wadhwa and Newton v. Admera Health, LLC, et al., in the Eastern District of California. The department said it earlier settled comparable claims with Admera Health LLC and NEXT Bio-Research Services LLC, which does business as Next Molecular Analytics.
The department said the settlement was the result of a coordinated effort by the Civil Division’s Commercial Litigation Branch, Fraud Section, the U.S. Attorney’s Office for the Eastern District of California, and HHS-OIG. Trial Attorney Elizabeth J. Kappakas and Assistant U.S. Attorney Catherine J. Swann handled the matter.
The department noted that the settlement resolves allegations only, and no court has found liability.