The settlement follows a criminal conviction and addresses more than $174 million in fraudulent Medicare claims involving multiple laboratories.
The United States has settled a False Claims Act (FCA) case involving genetic testing fraud against Jamie McNamara and his businesses, including Clarity Diagnostic Laboratories, Mercury Laboratory Services, Signify Laboratory, and Opteo Laboratory.
As part of the settlement, the US entered a civil consent judgment against McNamara and his laboratories in the US District Court for the District of New Jersey. This follows a related criminal case in the US District Court for the Eastern District of Louisiana, where McNamara was sentenced to 120 months in prison, restitution, and criminal forfeiture.
The government alleged that between November 2018 and July 2020, McNamara and his laboratories submitted more than $174 million in false and fraudulent claims to Medicare for genetic testing. The charges stated that McNamara paid kickbacks to health care providers to order genetic tests that were not medically necessary.
“Medicare fraud schemes profoundly erode taxpayer confidence and faith in our medical institutions. Schemes such as these must be rooted out, investigated, and prosecuted, not only for the monetary loss triggered by the fraud, but also to preserve the public’s trust,” says Michael M. Simpson, acting US attorney, in a release.
Broader Network of Convictions
The FCA complaint identified several other individuals who were subsequently convicted of criminal offenses related to the scheme. These include Marc Sporn, whose telemedicine companies caused more than $20 million in Medicare losses, and Adam W. Owens, whose marketing companies caused more than $10 million in losses. Additionally, Dr Sean P. O’Rourke pled guilty to accepting illegal kickbacks for ordering unnecessary genetic tests.
The genetic tests involved were designed to identify inherited mutations, which can affect a patient’s risk for certain diseases or their response to medications. Medicare coverage for these clinical laboratory tests is restricted to those that are medically necessary and not influenced by kickbacks.
“McNamara lined his pockets by preying on vulnerable Americans concerned about their health. The genetic tests Medicare patients were lured into receiving did not provide them with any answers…and cost taxpayers millions of dollars,” says Jonathan Tapp, Federal Bureau of Investigation special agent in charge, in a release.
Whistleblower Contributions
The case was initiated by a client of the Whistleblower Law Collaborative, who identified the national genetic testing fraud scheme. According to WLC, the client met with federal law enforcement officials from at least 10 different jurisdictions to assist in the investigation.
“In addition to Jamie McNamara, our client’s complaint identified significant criminal activities being committed by individuals and businesses operating in Florida, Louisiana, Texas, California, and elsewhere,” says Bruce C. Judge, partner, Whistleblower Law Collaborative, in a release.
In recognition of the whistleblower’s contributions, the Department of Justice agreed to share a portion of the criminal case recoveries through a Relator’s award. This marks the fifth settlement of an FCA case involving genetic testing fraud brought by a client of the firm.
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