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Genetic tests, fraud, and prison time: Important lessons for lab owners

On Behalf of | Oct 27, 2023 | Diagnostic Testing And Reference Labs |

Lab owners must maintain a difficult balance. They run a business which must make a profit, but they also must be aware of various federal regulations that guide operations. A failure to follow these regulations can result in serious consequences, as highlighted in a recent federal case.

What types of consequences are possible?

Depending on the details of the allegations, consequences for a failure to abide by federal regulations that guide lab operations can include steep financial penalties and even potential imprisonment.

There is a general belief that financial crimes, also known as white-collar crime, do not warrant the same kind of criminal treatment as violent offenses like rape and murder. This notion is not supported by recent cases. In the past few decades, the government has shifted its approach and takes financial crimes, like healthcare fraud, very seriously. As such, the government is pushing for, and often getting, harsh penalties when it pursues these types of cases.

How do these cases work?

In a recent example, the federal government built a successful case pushing for harsh penalties against a lab owner. The government stated the lab owner had defrauded the government millions in fraudulent claims to Medicare and Medicaid through claims for expensive cancer genetic testing kits. Upon review of the evidence, the court agreed. Evidence that helped the court rule in their favor included proof of kickbacks paid to patient brokers and telemedicine doctors who signed off on prescriptions to the lab without evaluating the patient.

The court sentenced the lab owner to almost thirty years imprisonment and ordered he forfeit more than $187 million in funds.

How can I make sure my lab does not face similar allegations?

Regular internal audits can help to better ensure the lab complies with applicable regulations. It is also important to take an investigation or any allegations of wrongdoing seriously. Those who are in this situation are wise to seek legal counsel to discuss their options.

Attorney John Rivas is responsible for this communication.

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