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Justice News

Department of Justice
U.S. Attorney’s Office
Southern District of California

FOR IMMEDIATE RELEASE
Thursday, July 23, 2020

San Diego Laboratory Admits Fraudulent TRICARE Billing; Agrees to Pay $49 Million

Assistant U. S. Attorneys Valerie Chu and Paul Starita (619) 546-6750/7701

NEWS RELEASE SUMMARY – July 23, 2020

SAN DIEGO - San Diego-based clinical laboratory Progenity, Inc. admitted today that it submitted fraudulent bills to TRICARE, the Department of Defense health care benefit program that covers military service members and their dependents, and to the Federal Health Care Employee Benefits Program (FEHBP), for clinical tests that it knew were not covered or properly payable by either program.

In addition, Progenity, formerly known as Ascendant MDx, Inc., and previously headquartered in Carlsbad, California, admitted that it offered improper incentives to patients and doctors to use its laboratory services.  To account for its fraud, Progenity has agreed to pay a total of $49 million in civil settlements in federal courts in the Southern District of California (SDCA) and the Southern District of New York (SDNY), as well as to multiple states.

Progenity offered noninvasive prenatal testing (“NIPT”) to pregnant women. NIPT refers to a category of genetic tests that screen for fetal chromosomal abnormalities, through analysis of fetal DNA present in a pregnant woman’s blood.  This form of genetic testing, however, did not have FDA approval and was considered by TRICARE as a “laboratory-developed test.”  As a result, TRICARE did not cover NIPT tests for its beneficiaries.  Therefore, in order to get reimbursed by TRICARE, between April 1, 2013 and April 30, 2016, Progenity falsely and fraudulently used a medical billing code that TRICARE covered, but that Progenity knew did not accurately reflect that the NIPT test. 

The U.S. Attorney’s Office for SDCA launched both a criminal probe into Progenity’s fraudulent billing practices and a civil investigation of the false claims Progenity had submitted to TRICARE and the FEHBP. Separately, SDNY initiated its own investigation into misconduct by Progenity relating to the improper incentives provided to patients and doctors to use its laboratory services.  SDNY also coordinated with multiple state Attorneys General to investigate Progenity’s miscoding of NIPT to Medicaid programs in New York and several other states.

Progenity’s settlement agreement requires the company to pay $16.4 million to settle the SDCA civil matter, $19,449,316 to settle the SDNY civil matter, and $13,150,684 to settle the state civil allegations. The civil settlements were based on an ability-to-pay, payment-over-time basis, following an analysis of financial condition submissions made by Progenity.  In light of Progenity’s remedial efforts, cooperation with the investigation, and payment of restitution to TRICARE and the FEHBP, the criminal investigation was resolved via a non-prosecution agreement, requiring that Progenity admit its misconduct and be subject to additional terms and conditions for up to a 24-month period.   

U.S. Attorney Robert Brewer said, “San Diego is known for cutting-edge research and innovation, particularly in the biomedical sciences, that advances fields and improves people’s lives.  But in the quest for advancement and profit, companies must still engage in honest and straightforward dealing, and provide the information that allows federal programs to determine whether to pay for new technologies.” Brewer commended the work of the attorneys from the criminal and civil divisions of the office and agents from the FBI and DCIS, who successfully conducted these parallel proceedings and brought to bear the full range of enforcement options to address Progenity’s misconduct.

“Fraudulent billing practices undermines the confidence in our healthcare system and in this case, cheated the TRICARE program serving the men, women and families of our military,” said Omer Meisel, Acting FBI Special Agent in Charge of the San Diego Field Office. “The FBI is committed to working with our partners and the public to stop fraud and ensure that healthcare dollars are used appropriately.”

“The settlement is a significant victory for the American public in that it returns ill-gotten proceeds to the U.S. Government and restores confidence in our healthcare system, including the U.S. military's TRICARE program,” said Bryan D. Denny, Special Agent in Charge of the Defense Criminal Investigative Service, Western Field Office.  “As in this case, any unprincipled actions by healthcare providers that tarnish and possibly corrupt the integrity of the TRICARE program will be reviewed and vigorously investigated by DCIS and its law enforcement partners.”

“Fraudulent billing is a theft from the FEHBP and the American taxpayer,” said Norbert E. Vint, Deputy Inspector General Performing the Duties of the Inspector General, Office of Personnel Management OIG. “I congratulate our investigators and law enforcement partners on this successful outcome. The OPM OIG will always work hard to investigate suspected fraud and abuse of the FEHBP.”

“Protecting and providing top quality health care to service members, veterans and their families is our primary mission at TRICARE,” said Lt. Gen. Ronald Place, USA, director, Defense Health Agency. “We thank the investigators who uncovered this fraudulent billing by a company trying to profit from taking advantage of our men and women on the front lines. We will continue to work with law enforcement and other state and federal agencies to ensure health care providers are held accountable for participating in any fraudulent practices.”

This case was handled by Assistant U.S. Attorneys Valerie Chu, Paul Starita, and Beth Clukey on behalf of the Southern District of California.

DEFENDANT                                                                      

Progenity, Inc.                                   

San Diego, CA

AGENCIES

Federal Bureau of Investigation

Defense Criminal Investigative Services

Topic(s): 
Health Care Fraud
Press Release Number: 
CAS20-0723-Progenity
Updated July 23, 2020