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Press Release

Pittsburgh-area Lab Owner Charged with Paying Kickbacks in Connection with Almost $130 Million in Medicare Claims for Genetic Testing

For Immediate Release
U.S. Attorney's Office, Western District of Pennsylvania

PITTSBURGH, Pa. – A resident of Monroeville, Pennsylvania, was charged in federal court with three conspiracy counts and one substantive count related to the payment of unlawful kickbacks, United States Attorney Scott W. Brady announced today.

Ravitej Reddy, 52, was charged by criminal Information with two counts of conspiracy to pay and receive kickbacks, one count of conspiracy to pay kickbacks, and one count of offering and paying kickbacks.

"In less than a year, Ravitej Reddy and his partners in crime were responsible for more than $125 million in genetic testing claims submitted to Medicare as the result of a sophisticated, nationwide kickback scheme," said U.S. Attorney Brady. "Together with our law enforcement partners, we will stay vigilant in the fight against unscrupulous players in the health care market who pursue personal profit at the expense of critical public programs."

"We will not tolerate anyone who cheats the healthcare system and lines their own pocket," said FBI Pittsburgh Special Agent in Charge Robert Jones. "This kind of fraud takes critical resources from our health care system, and we'll work tirelessly to stop these types of programs from being exploited."

"Medical professionals who seek to enrich themselves through kickback schemes – as alleged in this case - undermine taxpayer-funded programs and drive up health care costs for everyone," said Special Agent in Charge Maureen R. Dixon of the U.S. Department of Health and Human Services Office of Inspector General. "Today’s announcement demonstrates our commitment to working with our state and federal law enforcement partners to swiftly investigate such allegations of fraud."

According to the Information, the defendant owned two testing laboratories—Personalized Genetics, LLC, d/b/a Personalized Genomics (PGL), located in Pittsburgh, and Med Health Services Management, LP (MHS), located in Monroeville. Beginning as early as May 2018, and continuing through approximately April 12, 2019, the Information alleges that the defendant participated in three separate conspiracies related to Medicare billing for two types of genetic testing: cancer genomic testing (CGx) and pharmacogenetic testing (PGx). CGx testing used DNA sequencing to detect mutations in genes that could indicate a higher risk of developing certain types of cancers in the future. CGx testing, however, was not a method of diagnosing whether an individual presently had cancer. PGx testing detected specific genetic variations in genes that impacted the metabolism of certain medications. In other words, PGx testing helped determine, among other things, whether certain medications would be effective if used by a particular patient.

As alleged, the defendant and a group of co-conspirators comprising business consultants, marketers, and the operator of a telemedicine entity, among others, acquired thousands of testing samples from Medicare beneficiaries located throughout the United States, as well as the corresponding prescriptions that PGL and MHS needed to bill Medicare for CGx and PGx testing. For their part, the marketers used targeted campaigns to induce beneficiaries to submit CGx and PGx specimens by means of cheek swabs sent to their homes or provided to them at purported "health fairs" held throughout the United States. Marketers, in turn, were paid percentage-based kickbacks depending upon the Medicare reimbursements for beneficiaries whose samples they had obtained and submitted to PGL or MHS.

Likewise, the operator of a Florida-based telemedicine entity allegedly was paid kickbacks in connection with obtaining CGx and PGx prescriptions from physicians who were contracted by his company to review the beneficiaries’ personal and familial medical histories. As alleged, contract physicians authorized testing for greater than 95% of beneficiaries despite the fact that the doctors did not conduct a proper telemedicine visit, were not treating the Medicare beneficiaries for cancer or symptoms of cancer, did not use the test results in the treatment of the beneficiaries, and generally were not qualified to understand and interpret the test results.

According to the Information, the defendant and his co-conspirators took advantage of PGL’s and MHS’s physical locations within the Medicare coverage area that offered the highest reimbursement rates in the United States. As alleged, the co-conspirators used PGL and MHS as the billing laboratory despite the fact that the labs did not possess properly validated equipment to conduct any CGx testing on-site and, as such, were forced to send samples for proper testing by a so-called reference laboratory that was located outside of the lucrative coverage area.

The three charged conspiracies involve similar conduct related to the acquisition of CGx and PGx specimens. The first conspiracy, however, allegedly involved billings only through PGL, while the second and third conspiracies involved billings through MHS. According to the Information, the defendant engaged in the second and third conspiracies with some, but not all, of the same co-conspirators as the first conspiracy, and he pursued these alleged side deals, in part, as a means to increase his share of the profits relative to the PGL-based conspiracy. Finally, the Information charges one substantive kickback count, alleging that the defendant paid percentage-based kickbacks to another unrelated marketing entity in connection with the acquisition of PGx and other testing samples between October 2017 and April 2019.

According to the Information, the defendant caused PGL and MHS to submit Medicare claims for CGx and PGx testing that regularly exceeded $12,000 per beneficiary. In total, between May 2018 and April 12, 2019, the defendant’s laboratories billed Medicare more than $127 million for CGx and PGx testing, with reimbursements of approximately $60 million.

For each of the three conspiracy counts, the defendant faces a maximum sentence of five years in prison, a fine of $250,000, or both. For the substantive kickback charge, he faces a maximum sentence of 10 years in prison, a fine of $250,000, or both. Under the Federal Sentencing Guidelines, the actual sentence imposed would be based upon the seriousness of the offense and the prior criminal history, if any, of the defendant.

Assistant United States Attorney Eric G. Olshan is prosecuting this case on behalf of the government. The Federal Bureau of Investigation and U.S. Department of Health and Human Services – Office of Inspector General conducted the investigation of the defendant.


Updated November 26, 2019

Financial Fraud