U.S. agents search Clio Laboratories in fraud probe, says official

LAWRENCEVILLE, Ga./WASHINGTON (Reuters) – U.S. federal agents conducted a search of Clio Laboratories in Lawrenceville, Georgia, on Friday, a government official said, as part of a nationwide crackdown into genetic-testing fraud against federal health insurance programs.

A Reuters journalist in the early morning witnessed agents from both the FBI and the U.S. Department of Health and Human Services inspector general’s office pull in to the parking lot at Clio and enter the facilities.

Victoria Nemerson, the lab’s general counsel, was seen on the premises opening the doors for the agents. She did not immediately respond to an email seeking comment.

Federal investigators believe the fraud has been carried out by labs, doctors and marketers across the United States in a scheme to bilk federal health insurance programs, such as Medicare.

The search comes two days after Reuters published a special report that raised questions about the lab’s Medicare billing practices and whether the genetic tests the lab was running on senior citizens are medically necessary.

The use of genetic testing, which helps people determine their risks of developing cancer and other diseases, has skyrocketed in the United States.

For Medicare, the public insurance program for elderly and disabled Americans, payouts for genetic tests jumped from $480 million in 2015 to $1.1 billion in 2018, a Reuters analysis found.

Those figures do not include invoices for spending by state Medicaid programs, which serve the poor, or supplemental Medicare insurance programs offered by private insurers.

There are currently more than 300 ongoing federal investigations, conducted by multiple law enforcement agencies, into genetic testing fraud schemes, a law enforcement official previously told Reuters.

Many arrests and takedowns are currently under way.

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Earlier this week in Florida, prosecutors unveiled an indictment against Minal Patel, the owner of another Georgia-based lab called LabSolutions, alleging he defrauded Medicare and Medicaid insurance programs in connection with genetic cancer tests.

The fraud schemes at issue in the federal probes typically involved marketers who hire sales reps to get elderly residents to provide a cheek swab that they are told can be tested to help them understand their risks of developing cancer or whether their genetics could unlock clues about how they will respond to drug treatments.

They provide their insurance details and other sensitive information along with their DNA.

Doctors, many of whom work through telemedicine firms, then sign off on the tests as being medically necessary and they are shipped to a lab, which seeks Medicare payouts.

But many of the lab tests are not relevant to the patient’s history, and some of the doctors sign off on the results without conferring with the patient, said investigators familiar with the operations and patients interviewed by Reuters.

Suspect companies pocket thousands, with a cut going to doctors, but the seniors get little, if any, benefit, investigators say.

By law, all diagnostic lab tests must be ordered by a doctor treating a patient for a specific condition.

The Reuters investigation published on Wednesday featured interviews with two women whose DNA samples were sent to Clio after they participated in a genetic screening event in their condo building in Delray Beach, Florida, in February 2018.

One of the women, Janet Putrah, told Reuters that she never spoke with a doctor about the test and her Medicare Part B insurance plan was later billed more than $30,000 by Clio and paid the lab more than $12,000.

She subsequently filed a fraud complaint with the Health and Human Services inspector general.

The Reuters special report published this week revealed that Clio Laboratories and a cluster of other companies including Elite Medical Laboratories and medical billing company Laboratory Experts are connected to Jordan Satary, an entrepreneur in his mid-twenties whose father once ran a toxicology lab that went bust amid an ongoing federal investigation.

The Reuters journalist who witnessed Friday’s raid at Clio said he saw agents also searching both Elite and Laboratory Experts, which are located in the same business plaza as Clio.

Neither Jordan Satary nor his father, Khalid Satary, could immediately be reached for comment.