6 Takeaways From LabSolutions 'Unnecessary Testing' Verdict

• Jurisdiction: United States,Federal
• Law Firm: Sheppard Mullin Richter & Hampton
• Subject Matter: Food, Drugs, Healthcare, Life Sciences
• Author: Scott S. Liebman, A. Joseph Jay III and Audrey Crowell
• Published date: 17 January 2023

Last month, jurors returned a guilty verdict against Minal Patel, CEO of LabSolutions LLC, for an arrangement involving the company's promotion of medically unnecessary genetic testing.

The verdict follows a 2019 indictment filed as part of Operation Double Helix, a concerted enforcement action brought by the U.S. Department of Health and Human Services' Office of Inspector General and the U.S. Department of Justice, against 35 defendants, including telemedicine providers and genetic testing laboratories, for over $2.1 billion in losses related to fraudulent reimbursement for genetic testing.¹

LabSolutions' Arrangement

Under the arrangement in question, LabSolutions allegedly paid kickbacks to patient recruiters in exchange for arranging cancer genomic testing for Medicare beneficiaries, and, in turn, the patient recruiters passed on a portion of the kickbacks to telemedicine providers in exchange for cancer genomic testing referrals, whether or not the referrals were medically necessary.

The scheme targeted cancer survivors and their family members for preventative, rather than diagnostic or treatment-related, testing.

Lack of Medical Necessity

The primary concern reflected in the 13-count indictment was that LabSolutions submitted reimbursements to Medicare for cancer genomic tests that were not medically necessary, i.e., used in diagnosis or treatment.²

The U.S. Department of Justice argued that the cancer genomic tests were not medically necessary because the prescribing providers: (1) were not treating the beneficiaries for symptoms of cancer at the time the tests were ordered; (2) did not use the test result to treat the beneficiaries for cancer; (3) did not conduct proper telemedicine visits; and (4) often never communicated with the beneficiaries at all.

Narrow Coverage for Preventative Screening Tests

In 2021, Patel filed a motion to dismiss the indictment, arguing primarily that, although the cancer genomic tests may not have been used for diagnostic or treatment purposes, they were preventative screening tests, and, as such, were reimbursable by Medicare and should be excepted from Anti-Kickback Statute enforcement.³

Specifically, Patel argued that the cancer genomic tests were reimbursable by Medicare because LabSolutions followed guidance from the U.S. Preventative Services Task Force, which recommends genetic testing for asymptomatic patients who have a family history of breast cancer, and that Medicare is required to cover any screening test...