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October 2, 2019

35 people allegedly scammed Medicare out of $2B in genetic testing scheme

Daily Briefing

    The Department of Justice (DOJ) on Friday announced that it has brought charges against 35 individuals, including 10 medical professionals, for their alleged role in a Medicare scam involving dozens of telemedicine companies and genetic testing laboratories.

    Joe Beemsterboer, the senior deputy chief of DOJ's fraud section in the criminal division, said the health care scam is one of the largest in U.S. history and the defendants involved in the scheme could face decades in prison. DOJ said the scam cost Medicare more than $2 billion in unnecessary charges.

    About the scam

    DOJ said the charges stem from a joint criminal investigation, called Operation Double Helix, which involved DOJ, the FBI, HHS' Office of the Inspector General, and U.S. attorneys' offices. The investigation focused on telemedicine companies and genetic testing labs that allegedly enticed patients ages 65 and older to undergo unnecessary genetic tests to screen for cancer.

    Beemsterboer said the scam functioned on many layers and involved multiple players, including "those collecting patient information, to those selling it, to those doctors corruptly prescribing these genetic tests, to the labs corruptly billing the Medicare program."

    According to DOJ, the laboratories allegedly paid bribes and illegal kickbacks to medical professionals—including nine doctors—in exchange for referrals to Medicare beneficiaries. Ariana Fajardo Orshan, a U.S. attorney of the Southern District of Florida, said the companies allegedly exploited patients who feared they might have the genetic markers of cancers.

    Shimon Richmond, assistant inspector general for investigations at HHS, said the scam allegedly involved telemarketing companies directly contacting Medicare beneficiaries online, by telephone, or workers speaking with beneficiaries face-to-face in low-income housing areas or at health fairs, senior centers, and religious institutions. The telemarketers and workers would offer beneficiaries no-cost genetic testing to gauge their cancer risk or determine how well they would respond to treatments. Richmond said the workers then asked beneficiaries for their Medicare information, a copy of their driver's license, and a DNA sample.

    Richmond said workers relied on aggressive sales tactics, warning beneficiaries they might experience fatal conditions if they do not undergo the testing. Richmond said the telemarketers who collected the information from beneficiaries would then attempt to receive the genetic tests from beneficiaries' providers or they would have a provider they knew write the prescription for the test. Richmond said beneficiaries would often not receive the results of their tests or they would not receive counseling to interpret their test results. "So patients were left with a report that's meaningless to them, and is certainly not providing them with any benefit in terms of their health care," Richmond said.

    Richmond said the genetic tests came at no cost for patients, but Medicare paid $10,000 to $18,000 or more for the tests. Physicians who wrote the prescriptions, the telemarketers who organized the scheme, the workers who recruited patients, and the lab that conducted the testing would then split the Medicare reimbursement. 

    Richmond said the fraudulent tests could potentially harm patients in the future if Medicare decides not to cover a legitimate request from a physician for a genetic test because of earlier charges (Lynch, Reuters, 9/27; Alonso-Zaldivar, AP/ABC News, 9/27; Neighmond, "Shots," NPR, 9/27; DOJ release, 9/27).

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