Laboratory and Owner of Lab Management Services Company to Pay $3.77 Million to Resolve Kickback and Medical Necessity Claims
DALLAS - Primex Clinical Laboratories, LLC has agreed to pay $3,500,000 to resolve allegations that it violated the False Claims Act by paying kickbacks in exchange for laboratory referrals for patient pharmacogenetic testing. In a related settlement, Mitch Edland, the Chief Executive Officer and owner of DNA Stat, LLC, has agreed to pay $270,000 to resolve similar allegations. Both settlements were announced today by U.S. Attorney Erin Nealy Cox of the Northern District of Texas.
Primex Clinical Laboratories, LLC (Primex), is a licensed clinical laboratory providing clinical diagnostic testing services, including pharmacogenetic testing. DNA Stat, LLC (DNA Stat) was a laboratory management company that employed sales representatives and licensed pharmacists. Primex and DNA Stat entered into a services agreement related to pharmacogenetic testing services.
The settlement resolves allegations brought by two whistleblowers that Primex submitted claims to Medicare that were rendered false as a result of Primex and DNA Stat providing kickbacks from June 2013 through March 2016. The relators alleged several kickback schemes, including a scheme where the defendants created the appearance of paying physicians to provide clinical study data for a Primex-sponsored study related to pharmacogenetic testing when, in fact, the physicians were being paid for referring patients for the testing. The relators also alleged a scheme where the defendants provided physicians with in-office medical technicians to do work related to the Primex-sponsored study in an effort to induce those physicians to order pharmacogenetic tests from Primex. Finally, the relators alleged that the pharmacogenetic tests were not medically necessary. The United States also contends that DNA Stat’s agreement with Primex as well as its agreements with its sales representatives took into account the volume and value of referrals physicians made to Primex for pharmacogenetic tests when calculating compensation.
The settlement with Primex resolves the allegations centered on providing in-office medical technicians to physicians; entering into improper sales and services agreements; and submitting claims for pharmacogenetic tests that were not medically necessary. Mr. Edland’s settlement resolves all allegations against him contained in the lawsuit. Neither party admitted any wrongdoing or liability.
The qui tam, or whistleblower, lawsuit was brought by relators Don Pyburn and David Choate, former sales representatives for DNA Stat. The qui tam or whistleblower provisions of the FCA authorize private parties to sue for fraud on behalf of the United States and share in the recovery. The relators will receive $754,000.
The investigation was conducted by Health and Human Services Office of Inspector General and the FBI. The case was handled by Assistant U.S. Attorneys Dawn Whalen Theiss and Lindsey Beran.
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