Health Law & Business News

Lab Owner Indicted in Alleged $127 Million Genetic Testing Scheme

Nov. 26, 2019, 10:27 PM

A Pittsburgh-area lab owner is accused in a kickback conspiracy related to a $127 million genetic testing scam, the Department of Justice said Nov. 26.

The owner, Ravitej Reddy, participated in three scams related to Medicare billing for genetic testing services, federal prosecutors said in announcing the indictment.

Reddy is alleged to have worked with business consultants, marketers, and a telemedicine company to acquire thousands of testing samples from Medicare beneficiaries around the country. He also obtained the corresponding prescriptions needed to bill Medicare for genetic testing, the statement said.

The marketers acquired the testing samples by sending test-swab kits to Medicare beneficiaries in their homes and distributing the kits at “health fairs” held around the country. The tests were aimed at finding genetic mutations that could determine a patient’s risk of developing cancer or whether certain medications would be effective for a particular patient.

Reddy owns two labs: Personalized Genetics in Pittsburgh and Med Health Services in Monroeville, Pa.

Testing Wasn’t Justified

Reddy paid kickbacks to the marketers based on the Medicare reimbursements generated by the testing samples they provided, prosecutors alleged. He also sent kickbacks to a telemarketing company that obtained prescriptions from contract physicians who reviewed the personal and family histories associated with the testing samples, the DOJ said.

Those physicians authorized testing for more than 95% of beneficiaries despite the fact that the doctors did not conduct a proper telemedicine visit, were not treating the patients for cancer or symptoms of cancer, did not use the test results in treating them, and were not qualified to understand and interpret the test results, it said.

The indictment was not related to the $2.1 billion genetic-testing fraud takedown announced by the DOJ in September, according to Margaret Philbin, spokeswoman for the U.S. Attorney’s office in Pittsburgh.

Representatives of Reddy’s labs didn’t respond immediately to a request for comment.

The case is U.S. v Reddy, W.D. Pa., No. 2:19-cr-00357, 11/26/19.

To contact the reporter on this story: Christopher Brown in St. Louis at ChrisBrown@bloomberglaw.com

To contact the editors responsible for this story: Fawn Johnson at fjohnson@bloomberglaw.com; Peggy Aulino at maulino@bloomberglaw.com

To read more articles log in. To learn more about a subscription click here.