On April 4, the U.S. Department of Justice announced that Genotox Laboratories Ltd. has agreed to pay at least $5.9 million to settle charges of paying volume-based commissions to third-party marketers in violation of the Anti-Kickback Statute (AKS). The Austin, Texas, lab then brought the False Claims Act (FCA) into play by billing the tests it performed as a result of these tainted referrals to Medicare, TRICARE, and other federal health programs.
Genotox was also accused of getting physicians to submit blanket orders and standing orders to perform drug tests on all practice patients regardless of medical necessity. In addition to the nearly $6 million price tag, the settlement also requires Genotox to enter into a five-year Corporate Integrity Agreement (CIA) with the Department of Health and Human Services Office of Inspector General.
What About EKRA?
Paying commissions to third-party marketers based on the volume or value of drug test orders they generate is problematic under not only the AKS but also the Eliminating Kickbacks in Recovery Act of 2018 (EKRA). While both laws ban kickbacks, EKRA is extremely vague. And unlike the AKS, it has no regulations that explain the rules and how to comply with them. But what makes EKRA especially scary is that it covers arrangements that meet AKS safe harbors.
Apparently, Genotox wasn’t charged with any EKRA violations in this case. The most likely explanation for this is that the U.S. Attorney concluded that it didn’t need to rely on EKRA since Genotox’s commissions arrangements didn’t qualify for any AKS safe harbors.
To learn more about the key laws impacting medical labs, and how to avoid running afoul of them like Genotox, check out a free sample of our Master Guide to Clinical Lab Compliance.