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Federal Genetic Testing Fraud Prosecutions

Federal Genetic Testing Fraud Prosecutions – What You Need to Know

Federal agents just showed up at your laboratory. Or you received a target letter from the Department of Justice. Or a former employee told you that investigators have been asking questions about your genetic testing billing practices. Your first instinct might be to think this is some kind of misunderstanding – you run real tests on real samples, your lab is CLIA certified. Heres the first thing you need to understand: genetic testing fraud prosecutions have become a federal enforcement priority. Minal Patel received 27 years in federal prison – effectively a life sentence – for a $463 million genetic testing scheme. Operation Double Helix charged 35 defendants for $2.1 billion in fraud – one of the largest healthcare fraud schemes ever prosecuted. These arnt theoretical outcomes.

Welcome to Spodek Law Group. We handle federal healthcare fraud defense cases regularly, including cases were laboratory owners first realize theyre facing serious criminal exposure through exactly this kind of contact. The second thing you need to understand is this: genetic testing fraud is now a primary target for the Health Care Fraud Strike Force. In the 2025 National Healthcare Fraud Takedown, 49 defendants were charged specifically for telemedicine and genetic testing schemes involving $1.17 billion in fraudulent claims. The DOJ continues to pursue what it calls Operation Double Helix – coordinated enforcement targeting cancer genetic testing and pharmacogenetic testing fraud. Federal prosecutors view the genetic testing industry as a fraud-prone sector – and the sentences are devastating.

Heres something most laboratory owners dont realize about genetic testing fraud. The paradox is brutal. Tests that patients received for “free” through cheek swabs at health fairs were billed to Medicare at $6,000 to $12,000 each. Labs that ran those tests correctly can still go to prison for decades. The crime isnt performing bad tests. The crime is ordering tests that patients didnt need. The crime is paying kickbacks to get those orders. The crime is billing Medicare for medically unnecessary cancer genetic testing that was never ordered by the patients’ actual physicians.

The Testing That Creates Criminal Liability

Heres the uncomfortable truth about genetic testing billing. Everything depends on medical necessity – and in the genetic testing world, medical necessity is narrowly defined.

CGx and PGx testing have specific Medicare coverage requirements. Cancer genetic testing (CGx) uses DNA sequencing to detect mutations that could indicate a higher risk of developing certain cancers. Pharmacogenetic testing (PGx) detects genetic variations affecting how patients metabolize medications. Medicare covers these tests only in limited circumstances – when theres a clinical indication and a treating physician orders them based on patient history.

Tests billed at $12,000 per beneficiary were ordered for patients who didnt need them. In one Pittsburgh-area case, laboratories billed Medicare more than $127 million for CGx and PGx testing, with claims regularly exceeding $12,000 per beneficiary. Medicare reimbursed approximately $60 million. The tests may have been performed correctly – but patients didnt qualify for them. Every claim was fraudulent.

Genexe and Immerge settled for $6 million over unnecessary genetic testing. The laboratories billed Medicare for genetic testing that was regularly reimbursed at rates exceeding $6,000 per test. The tests were medically unnecessary and tainted by kickbacks. The marketing companies and executives who ran them agreed to pay millions to resolve False Claims Act allegations.

Think about what that means for your laboratory. Every genetic test order is potential criminal liability. If the ordering physician wasnt the patients’ treating doctor, the test may be fraudulent regardless of whether it was performed correctly. If you paid for referrals, every connected claim is tainted by kickbacks. The science can be perfect while the billing is criminal.

The Cheek Swab Pipeline

Heres something about genetic testing fraud that creates massive criminal exposure. The way patient samples enter the system reveals the fraudulent nature of the entire operation.

Cheek swabs collected at “health fairs” were fraud factories. Marketers set up booths at health fairs, community events, senior centers. They offered “free” genetic testing. They collected cheek swab samples and Medicare numbers. Those samples went to laboratories that billed Medicare thousands of dollars for tests the patients didnt need and their actual physicians never ordered.

Robert Desselle recruited beneficiaries at grocery stores and car dealerships. He paid other marketers to approach Medicare beneficiaries in parking lots, pharmacies, and grocery stores. They persuaded seniors to take tests using deceptive methods. Desselle bribed a telemedicine company to supply doctors’ orders. The laboratories paid kickbacks in exchange for the referrals. He recieved 57 months in federal prison, ordered to pay $4.5 million in restitution and forfeit $2.1 million.

The scheme generates thousands of test referrals. Telemarketers called Medicare beneficiaries offering free cancer screening. Marketers collected samples at community events. Patient brokers approached seniors wherever they gathered. Each sample became a $6,000-$12,000 claim. Each claim was potentially fraudulent. Each participant faces federal charges.

Heres the irony that destroys laboratories. “Health fairs” sound like community service. “Free testing” sounds like patient benefit. “Cancer screening” sounds like preventive care. But prosecutors see the scheme clearly: mass collection of Medicare numbers and samples, rubber-stamp orders from telemedicine doctors, and laboratories billing thousands per test. The marketing that seemed legitimate was actualy fraud infrastructure.

The Kickback Arrangements That Destroy Labs

Heres something about genetic testing operations that creates enormous criminal exposure. The payment structures that bring samples to your lab may be illegal kickback arrangements.

Percentage-based payments are kickbacks. In genetic testing fraud schemes, marketers are typically paid based on a percentage of Medicare reimbursements. If Medicare pays $6,000 for a test, the marketer gets a cut. This is textbook Anti-Kickback Statute violation. Payment tied to the volume or value of referrals is illegal regardless of what you call it.

Patient brokers received payments for every sample they delivered. In the Operation Double Helix schemes, patient brokers obtained signed doctors’ orders from telemedicine companies, then sold those orders and samples to laboratories. The laboratories paid kickbacks in exchange for the referrals. Everyone in the chain – brokers, telemedicine companies, laboratories – faces federal charges.

Keith Gray ran a $335 million cardio genetic testing scheme. He allegedly paid healthcare kickbacks to obtain referrals for medically unnecessary cardiovascular genetic testing. Medicare reimbursed approximately $54 million for fraudulently billed claims. Gray allegedly laundered the proceeds by purchasing expensive luxury vehicles. The scheme demonstrates that genetic testing fraud extends beyond cancer testing to any form of genetic analysis.

Heres the hidden connection most laboratory owners miss. Every payment to marketers, recruiters, or patient brokers is potentialy a kickback. Every relationship with telemedicine companies that provide orders is potentialy a kickback arrangement. The payment structure that brings samples to your lab is the payment structure that sends you to prison.

Operation Double Helix

Heres something about genetic testing fraud enforcement that laboratory owners need to understand. The government has a coordinated operation specifically targeting this industry.

Operation Double Helix charged 35 defendants for $2.1 billion. In September 2019, the Department of Justice announced charges in five federal districts against defendants associated with dozens of telemedicine companies and genetic testing laboratories. It was one of the largest healthcare fraud schemes ever charged. The defendants allegedly paid kickbacks to obtain doctors’ orders, then submitted billions in fraudulent claims.

The operation targeted the entire supply chain. Patient recruiters who collected samples at health fairs. Telemedicine companies that provided doctors’ orders without actual patient examinations. Laboratories that billed Medicare for unnecessary tests. Everyone connected to the scheme faced federal charges.

Minal Patel was sentenced to 27 years. He owned LabSolutions LLC in Georgia. From July 2016 through August 2019, the laboratory submitted more than $463 million in claims to Medicare, including thousands of medically unnecessary genetic tests. Medicare paid over $187 million. Patel conspired with patient brokers, telemedicine companies, and call centers. His sentence is effectively a life term.

Heres the consequence cascade. You pay a marketer to bring you samples. Years later, Operation Double Helix investigators trace that marketer’s network. They identify every laboratory that received samples. Your laboratory is on the list. Now youre a target. The enforcement action that started with someone else ends with federal charges against you.

The Cases That Show What Happens

If you think genetic testing fraud prosecutions are theoretical, look at what actualy happens to laboratory owners and operators.

Jamie P. McNamara received the maximum sentence. He operated laboratories in Louisiana and Texas that obtained doctors’ orders for genetic testing through aggressive telemarketing campaigns. Telemedicine doctors who were not patients’ treating physicians signed orders without consultations. He paid illegal kickbacks disguised through sham contracts. The FBI noted the court sentenced him “to the maximum allowed by law considering his complete and total disrespect for the system.” He recieved 10 years in federal prison for a $174 million scheme.

Harold Albert “Al” Knowles and Chantal Swart faced a $359 million scheme. They were charged in Boca Raton, Florida for engineering medically unnecessary genetic tests through kickbacks. The scheme demonstrates that even massive fraud operations eventually face prosecution.

Paul Wexler and Paul Bleignier operated a telemarketing company. They recruited Medicare beneficiaries for cancer genetic testing that was medically unnecessary. They caused Medicare to be billed $17.3 million and were paid $5.2 million. They recieved sentences of four years and two years in federal prison respectively.

The Pittsburgh-area lab billed $127 million. Claims regularly exceeded $12,000 per beneficiary. Medicare reimbursed approximately $60 million. The laboratory owner was charged with paying kickbacks in connection with those claims.

These arnt unusual cases. They represent standard enforcement outcomes. The prison sentences reach decades. The restitution orders are in the hundreds of millions. The consequences are catastrophic.

How Genetic Testing Investigations Begin

Heres something about how these cases develop that should concern every laboratory owner. Investigations often begin long before anyone contacts you.

Medicare data analytics identify suspicious billing patterns. Your claims are compared against statistical norms. If your laboratory bills significantly more per beneficiary then similar labs, thats flagged. If your CGx and PGx volumes spike suddenly, thats flagged. If certain referring physicians generate unusual volumes, thats flagged. The investigation starts with data – before anyone visits your facility.

Patient brokers become cooperating witnesses. When the government investigates a patient broker who collected samples at health fairs, that broker identifies every laboratory they worked with. When they investigate telemedicine companies, those companies identify every laboratory that received their orders. You may become a target becuase someone in your referral chain was investigated first.

Whistleblowers have massive financial incentive to report. Under the False Claims Act qui tam provisions, whistleblowers can receive 15-30% of government recoveries. Your billing staff, your compliance officer, your salespeople – anyone who sees something questionable has powerful financial motivation to report it. A single employee could receive millions.

The Health Care Fraud Strike Force coordinates targeting. Since March 2007, the Strike Force has charged more than 5,800 defendants who collectively billed federal healthcare programs and private insurers more than $30 billion. Operation Double Helix is just one coordinated action. The Strike Force operates in 27 federal districts with dedicated prosecutors and investigators.

Heres the consequence cascade. A patient broker is investigated. They cooperate and provide records of every laboratory they delivered samples to. Your laboratory is on the list. The government analyzes your billing patterns. They identify claims connected to the broker. Federal agents show up at your facility.

What You Cannot Do When Investigated

Heres what laboratory owners do when they learn about investigations. They panic. They try to fix things. They make decisions that create additional criminal exposure.

Do NOT destroy or alter documentation. Test orders, billing records, contracts with marketers, payment records. Destroying any of this is obstruction of justice. The government probly already has copies through Medicare claims data and records seized from marketers and telemedicine companies. Destruction proves consciousness of guilt while accomplishing nothing.

Do NOT contact marketers, telemedicine companies, or brokers to coordinate stories. If you paid kickbacks or received samples through problematic channels, your natural instinct is to talk to others involved. Dont. Coordinating testimony is witness tampering. They may already be cooperating with the government. Your conversation could be recorded.

Do NOT continue questionable referral arrangements. If youre receiving samples through marketing relationships that might be kickbacks, stop. But dont try to “clean up” by restructuring contracts or creating backdated documentation. Thats additional fraud.

Do NOT assume cooperation will protect you. Laboratory owners often think full cooperation will result in leniency. Cooperation might help at sentencing if youre convicted. But it dosent prevent prosecution. Minal Patel cooperated – he still got 27 years. Everything you say to investigators can be used against you. You need an attorney before you say anything.

The False Claims Act Multiplier

Heres something about genetic testing fraud that exponentialy increases legal exposure. Every test creates False Claims Act liability – and genetic tests are billed at thousands of dollars each.

How the multiplier works. You receive samples through a kickback arrangement. Every test billed based on those samples becomes a false claim. Each false claim carries penalties of up to $27,894 (as of 2024). Plus treble damages – three times the government’s loss. A laboratory processing 1,000 tests at $6,000 each creates $6 million in billing – and potentially tens of millions in False Claims Act exposure.

The exposure compounds with test volume. LabSolutions submitted $463 million in claims. Medicare paid $187 million. The False Claims Act exposure on that volume is astronomical. Patel’s 27-year sentence reflects not just healthcare fraud but the massive scale of False Claims Act liability.

Each test is a seperate claim. If your laboratory processed 10,000 genetic tests through problematic referral arrangements, you face 10,000 potential false claims. At $27,894 per claim in penalties alone, thats over $278 million in exposure before treble damages.

Heres the uncomfortable truth about False Claims Act exposure. Individual kickbacks to marketers might seem manageable. A few hundred dollars per sample. A percentage of reimbursement. But the False Claims Act transforms every connected test into seperate liability. What seems like limited exposure becomes financial devastation that follows you for the rest of your life.

The Exclusion That Ends Everything

Heres something about genetic testing fraud convictions that laboratory owners need to understand. Federal conviction triggers mandatory exclusion from Medicare, Medicaid, and all federal healthcare programs.

Exclusion means your laboratory cannot bill federal programs. You cannot process tests for Medicare or Medicaid patients. In the genetic testing industry, where Medicare represents a huge portion of revenue for many labs, exclusion effectively closes your business.

Individual exclusion follows you personally. Even if you close the laboratory, you cannot work for any entity that bills federal healthcare programs. You cannot start a new lab. You cannot work for another laboratory. Your career in healthcare is effectively over.

The punishment extends far beyond the prison sentence. You serve your time. You pay your fines. But you still cant work in laboratory services becuase youre excluded. Minal Patel will be excluded for life – assuming he survives his 27-year sentence.

What You Should Do Right Now

If federal investigators have contacted your laboratory, or if you have referral arrangements that might trigger scrutiny, heres exactly what you should do:

Contact a federal healthcare fraud defense attorney immediatly. Not a general business lawyer. Not your regulatory consultant. Someone who specificaly handles federal healthcare fraud cases and understands Operation Double Helix and Strike Force prosecutions.

Do NOT speak to investigators without counsel. Federal agents may approach you or your staff for “voluntary” interviews. There is nothing voluntary about it. Anything said can be used to build the case against you. Politely decline and contact an attorney immediatly.

Preserve all documentation exactly as it is. Test orders, billing records, contracts with marketers, telemedicine agreements, payment records. Do not alter, destroy, or organize anything. Document preservation is critical.

Identify all potentially problematic referral sources. Marketing relationships. Patient broker arrangements. Telemedicine companies that provided orders. Health fair sample collection. Your attorney needs to understand the full scope.

Do NOT discuss the investigation with staff, marketers, or referral sources. Anyone you talk to can be compelled to testify. They may already be cooperating with the government. Only attorney-client communications are protected.

Todd Spodek tells every laboratory owner in this situation the same thing: federal genetic testing fraud investigations are serious criminal matters. Minal Patel got 27 years – effectively a life sentence. Jamie P. McNamara got 10 years – the maximum. Robert Desselle got 57 months for recruiting at grocery stores. Your response in the next few days could determine wheather this becomes a matter that resolves favorably – or federal charges that destroy your business and your freedom.

Call Spodek Law Group at 212-300-5196. Before you speak to investigators. Before you make decisions that create additional exposure. Before a referral arrangement becomes a federal prosecution.

Genetic testing fraud is a federal enforcement priority. Operation Double Helix charged 35 defendants for $2.1 billion. What you do next matters enormosly.