Laboratory Fraud: The Gift That Keeps On Giving

Takeaway: Laboratory fraud continues to be pervasive in the healthcare industry.

Every sector of the healthcare industry relies upon laboratory testing. Lab tests are used to diagnose virtually all illnesses and conditions ranging from the common flu to cancer. The average American receives their first lab test, in the form of genetic testing, while they are in the womb, and undergoes multiple lab tests each year for the rest of their life. Fascinatingly, some lab tests are even conducted post-mortem. Because there are seemingly an indefinite amount of lab tests that are used for an indefinite amount of purposes, fraud has been and continues to be rampant in the laboratory space.

Due to the important role lab tests play in the healthcare industry, the vast number of lab tests ordered each year, and the claims to government payors for these labs tests, laboratory fraud remains a Department of Justice (DOJ) enforcement priority. “Laboratory testing is an essential part of patient care, not a vehicle for greed and exploitation,” said Deputy Inspector General for Investigations Christian J. Schrank of the Department of Health and Human Services, Office of Inspector General (HHS-OIG).[1]Assistant Attorney General Brett A. Shumate of the Justice Department’s Civil Division noted that “kickbacks to doctors can undermine medical decision-making, subject patients to wasteful medical treatments, and squander taxpayer money.”[2] This thought was echoed by Tom Wheeler, U.S. Attorney for the Southern District of Indiana: “kickback arrangements that drive unnecessary testing waste taxpayer dollars and undermine the integrity of our healthcare system.”[3] Similarly, Kelly O. Hayes, U.S. Attorney for the District of Maryland stated, “providing impermissible compensation to induce patient referrals that then lead to medically unnecessary diagnostic tests is simply unacceptable. We’re committed to taking the necessary actions to protect patients and taxpayer-funded government health programs.”[4]

The DOJ’s commitment to eradicating lab fraud is evident in its criminal and civil prosecution and settlement history. Below are just a few of the lab fraud cases that have been resolved over the last five months:

• In September 2025, Christopher Grottenthaler, former Founder and CEO of Texas-based True Health Diagnostics, LLC, agreed to pay $4.25 million to resolve False Claims Act (FCA) litigation with the United States alleging illegal kickbacks to doctors for laboratory referrals in violation of the Anti-Kickback Statute (AKS).[5] The DOJ secured an additional $1.8 million from two healthcare providers and seven marketers to resolve kickback allegations.
• In September 2025, Semler Scientific Inc., a California-based medical device manufacturer, agreed to pay $29.8 million to resolve allegations that it caused health care providers to submit false reimbursement requests to Medicare for photoplethysmography diagnostic tests that did not meet coverage requirements.[6]
• In November 2025, Patients Choice Laboratories (PCL), a diagnostic laboratory headquartered in Indiana, agreed to pay the United States $9.62 million to resolve allegations that it entered a marketing agreement under which it made payments for laboratory test referrals and services that supported false or medically unnecessary infectious disease testing in violation of the FCA and AKS.[7]
• In November 2025, VRA Enterprises, LLC dba Precision Rx (VRA), a pharmacy located in Tampa, Florida, agreed to pay over $17 million to resolve allegations that it violated the FCA by submitting or causing the submission of false claims to Medicare for Over-The-Counter Covid-19 tests that were not provided to beneficiaries, or that were sent to beneficiaries months after VRA had billed them to Medicare.[8]
• In November 2025, Genetic Technological Innovations, LLC (GTI), a diagnostic laboratory headquartered in Scottsdale, Arizona, agreed to pay the United States $1.635 million to resolve allegations that it violated the FCA and AKS by knowingly submitting claims to Medicare for respiratory pathogen panels that were either medically unnecessary or obtained through kickbacks.[9]
• In November 2025, Health First Urgent Care, an urgent care clinic with locations in Richland and Pasco, Washington, agreed to pay over $2.8 million to resolve claims that it fraudulently overbilled Medicare and Medicaid for polymerase chain reaction (PCR) respiratory and urinary tract infection panel diagnostic tests.[10]
• In January 2026, Clinical laboratory LTD Holding LLC, formerly known as Labtech Diagnostics LLC (Labtech), of Anderson, South Carolina, and its founder and CEO Joseph Labash, agreed to pay at least $6.8 million to the United States to resolve allegations that Labtech and Labash knowingly and willfully paid five types of kickbacks to healthcare providers to induce laboratory testing referrals.[11] With this settlement, the DOJ secured over $11.5 million in civil FCA settlements relating to Labtech, including recoveries from nine doctors.

As previously expressed in the June 2023 article, “Laboratory fraud: What was old is new again,” lab fraud affects every aspect of the healthcare industry.[12] Due to its ever-evolving nature, lab fraud has been and continues to be a focus of the DOJ.

 

[1] Press Release, U.S. Dep’t of Justice, Kaiser Permanente Affiliates Pay $556M to Resolve False Claims Act Allegations (Jan. 14, 2026), https://www.justice.gov/opa/pr/laboratory-ceo-marketers-and-physicians-pay-over-6m-settle-allegations-management-service.

[2] Id.

[3] Press Release, U.S. Atty’s Office for the Dist. of Md., Diagnostic Laboratory Agrees to Pay More Than $9 Million to Settle Alleged False Claims Act Violations (Nov. 13, 2025), https://www.justice.gov/usao-md/pr/diagnostic-laboratory-agrees-pay-more-9-million-settle-alleged-false-claims-act.

[4] Id.

[5]Press Release, U.S. Dep’t of Justice, Kaiser Permanente Affiliates Pay $556M to Resolve False Claims Act Allegations (Jan. 14, 2026),  https://www.justice.gov/opa/pr/laboratory-ceo-marketers-and-physicians-pay-over-6m-settle-allegations-management-service.

[6] Press Release, U.S. Dep’t of Justice, Semler Scientific Inc. and Bard Peripheral Vascular Inc. to Pay Nearly $37M to Resolve False Claims Act Allegations Relating to FloChec and QuantaFlo Devices (Sep. 26, 2025), https://www.justice.gov/opa/pr/semler-scientific-inc-and-bard-peripheral-vascular-inc-pay-nearly-37m-resolve-false-claims.

[7]Press Release, U.S. Atty’s Office for the Dist. of Md., Diagnostic Laboratory Agrees to Pay More Than $9 Million to Settle Alleged False Claims Act Violations (Nov. 13, 2025), https://www.justice.gov/usao-md/pr/diagnostic-laboratory-agrees-pay-more-9-million-settle-alleged-false-claims-act.

[8] Press Release, U.S. Atty’s Office for the Middle Dist. of Fl., VRA Enterprises Agrees To Pay Over $17 Million For Allegedly Billing Medicare For Over-The-Counter COVID-19 Tests That Were Not Provided To Beneficiaries, Or That Were Sent To Beneficiaries Months After Being Billed To Medicare (Nov. 14, 2025), https://www.justice.gov/usao-mdfl/pr/vra-enterprises-agrees-pay-over-17-million-allegedly-billing-medicare-over-counter.

[9] Press Release, U.S. Atty’s Office for the Dist. of Md., Diagnostic Laboratory Agrees to Pay More Than $1 Million to Settle Alleged False Claims Act Violations (Nov. 20, 2025), https://www.justice.gov/usao-md/pr/diagnostic-laboratory-agrees-pay-more-1-million-settle-alleged-false-claims-act.

[10] Press Release, U.S. Atty’s Office for the Eastern Dist. of Wash., Tri-Cities Urgent Care Clinic Agrees to Pay $2.8 Million to Resolve Claims of Overbilling for Diagnostic Tests (Nov. 17, 2025), https://www.justice.gov/usao-edwa/pr/tri-cities-urgent-care-clinic-agrees-pay-28-million-resolve-claims-overbilling-0.

[11] Press Release, U.S. Dep’t of Justice, South Carolina Laboratory Pleads Guilty and Agrees to Pay At Least $6.8M to Settle Allegations of Kickbacks to Doctors (Jan. 7, 2026), https://www.justice.gov/opa/pr/south-carolina-laboratory-pleads-guilty-and-agrees-pay-least-68m-settle-allegations.

[12] Marc S. Raspanti, Esq., Pamela Coyle Brecht, Esq., Ashley Kenny, Esq., “Laboratory fraud: What was old is new again,” Compliance Today, June 2023, https://www.falseclaimsact.com/wp-content/uploads/2023/06/2023_Laboratory-raud-What-Was-Old-Is-New-Again.pdf.