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Florida-based NeoGenomics Laboratories Inc. has agreed to pay $9,813,260 to settle allegations that it violated the False Claims Act, federal officials announced Monday.
According to the government, the company provided below-fair-market-value consulting services to health care providers that referred patients to NeoGenomics for laboratory testing. The settlement also addresses allegations that NeoGenomics paid independent consultants variable, referral-based compensation to identify health care providers capable of sending patient referrals to the laboratory.
The Department of Justice alleged that the conduct occurred through NeoGenomics’ Laboratory Clinical Initiative (LCI) program. Under LCI, the company offered laboratory consulting services to 28 health care providers attempting to build in-house diagnostic capabilities for flow cytometry and Fluorescence In-Situ Hybridization (FISH).
The government contended that providing these services below fair market value was intended to induce test referrals, violating the Anti-Kickback Statute and the Stark Law.
Additionally, the government alleged that NeoGenomics contracted with independent consultants whose compensation varied based on the volume or value of referrals generated by the customers they identified.
NeoGenomics self-disclosed the conduct to the federal government, cooperated with the investigation, and took remedial actions. These measures included ending the consulting agreements, terminating responsible personnel, and providing investigation support and supplemental records to federal authorities. As part of the agreement, the United States acknowledged that NeoGenomics’ cooperation entitled the company to settlement credit.
“Federal law prohibits paying remuneration to induce referrals of federal health care services, including by offering services at below fair market value,” said Assistant Attorney General Brett A. Shumate of the Justice Department’s Civil Division. “We encourage companies to self-disclose improper remuneration and cooperate with our investigations in order to mitigate the consequences of prior conduct.”
“Providing services below fair market value to drive referrals — as alleged here — undermines independent medical judgment,” said Acting Deputy Inspector General for Investigations Miranda L. Bennett of HHS-OIG. “The Self-Disclosure Protocol remains an important tool for bringing potential violations to light and ensuring they are addressed appropriately.”
The investigation and settlement were coordinated by the Justice Department’s Civil Division, Commercial Litigation Branch, Fraud Section, and the Department of Health and Human Services Office of Inspector General. Senior Trial Counsel Sarah Arni handled the matter for the Civil Division.
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Florida Laboratory NeoGenomics Agrees To $9.8 Million Settlement Over False Claims Act
