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Press Release

AutoGenomics, Inc. Agrees to Pay Over $2.5 Million for Allegedly Paying Kickbacks

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

MADISON, WIS. – Scott C. Blader, United States Attorney for the Western District of Wisconsin, announced today that AutoGenomics, Inc. has agreed to pay the United States $2,538,000 to resolve allegations that it violated the False Claims Act and Anti-Kickback Statute by engaging in a scheme to bill Medicare for molecular genetic testing performed for nursing home patients that were induced by the payment of remuneration (which includes money or anything of value), or a “kickback,” for the referral of those genetic tests. 

AutoGenomics, located in Carlsbad, California, formerly owned and operated a laboratory doing business as PersonalizeDx Labs (collectively “AutoGenomics”).  In April 2013 and March 2015, AutoGenomics entered into agreements with a California-based health care marketing company to utilize AutoGenomic’s laboratory services for tests ordered by the health care marketing company’s clients.  Pursuant to these agreements, AutoGenomics paid the health care marketing company a specified monetary kickback for each test that was reimbursed by Medicare, but only if Medicare paid the claim.  Under these agreements, the amount of the kickback was based either on a percentage or fixed amount of Medicare’s reimbursement for each test.  As explained below, such agreements violate federal law. 

Prestige Administrative Services, LLC, doing business as Prestige Healthcare (“Prestige”), owned and operated residential nursing homes in Wisconsin and other states.  In 2014 and 2015, Prestige provided the health care marketing company information to identify its Medicare patients, and authorized access to its patients to obtain buccal cell samples and submitted the samples to AutoGenomics for the molecular genetic testing to be performed and claims submitted to Medicare for payment.  Prestige, while not admitting liability, previously settled its alleged role in the conduct for nearly $1 million for causing the submission of medically unnecessary tests.

According to this settlement, the United States alleged that AutoGenomics’s submission of genetic testing claims to Medicare that were predicated by the payment of kickbacks negotiated in the agreements violated the Anti-Kickback Statue and the False Claims Act because a claim for reimbursement that is the result of a kickback is a false claim.  The United States further alleged that the false claims resolved by the settlement were for the payment of kickbacks for the submission of laboratory genetic testing performed for patients residing at 76 nursing homes, at both Prestige and non-Prestige owned and operated facilities. 

“The purpose of the Anti-Kickback Statute is to protect federal health beneficiaries and Medicare from the influence of money or other things of value for the referral of unnecessary testing, and it guards against waste, fraud, and abuse of our federal health care programs,” said United States Attorney Blader.  “The state surveyors provided crucial assistance in identifying the facts that led to our federal investigation and this settlement.  This settlement is a perfect example of our state and federal partners working cooperatively to uncover Medicare fraud and preying upon the elderly for financial gain.” 

“The payment of kickbacks is a corrupt practice that inappropriately influences an individual or entity’s capacity to make unbiased decisions which is of particular concern in the health care environment” said Lamont Pugh III, Special Agent in Charge, U.S. Department of Health & Human Services, Office of Inspector General -  Chicago Region (“HHS OIG”).  “Kickbacks can result in overuse of diagnostic testing and other services that ultimately lead to increase program costs and waste valuable taxpayer dollars.”

The claims resolved by the settlement are allegations only; there has been no determination of liability. 

The settlement was the result of a joint investigation conducted by HHS OIG and the U.S. Attorney’s Office for the Western District of Wisconsin.  The alleged factual basis for the investigation was discovered during survey work performed by professionals at the Wisconsin Department of Health Services Division of Quality Assurance.  The prosecution of this case was handled by Assistant U.S. Attorney Leslie K. Herje. 

Updated January 11, 2021

False Claims Act