UTC Laboratories—also known as Renaissance RX (RenRX)—and its three principals have agreed to pay a combined $42.6 million to settle federal allegations that they paid kickbacks in exchange for laboratory referrals for pharmacogenetic testing, as well as for furnishing and billing for tests that were not medically necessary, all in violation of the False Claims Act.
In addition, New Orleans-based UTC/RenRX agreed to be barred from participating in any federal health care program for 25 years.
The settlement resolves allegations in six lawsuits pending in U.S. District Court for the Eastern District of Louisiana. All six were filed under the qui tam or whistleblower provisions of the False Claims Act, which permit private individuals to sue on behalf of the government for false claims and to share in any recovery.
The federal government alleged that between 2013 and 2017, UTC and its principals offered and paid remuneration to physicians to induce the ordering of pharmacogenetic tests, purportedly in return for their participation in the Diagnosing Adverse Drug Reactions Registry (DART).
According to DART’s page on ClinicalTrials.gov (NCT01970709), the registry was designed to assess whether the use of pharmacogenomic data results in a meaningful change in a subject’s drug or dose regimen: “In addition, the Registry will evaluate the relationship between adverse drug reactions (ADR) and genotype and assess resource utilization (emergency department visits and hospitalizations) associated with ADR.”
The government also alleged that UTC and its principals offered and paid remuneration, including sales commissions, to entities and individuals as part of the scheme, and furnished pharmacogenetic tests that were not medically necessary and billed Medicare for them.
“The payment of kickbacks in exchange for medical referrals undermines the integrity of our healthcare system,” Assistant Attorney General Jody Hunt of the Department of Justice’s Civil Division said in a statement.
Hunt added that the settlement, announced Wednesday, “reflects the Department of Justice’s commitment to ensuring that taxpayer monies are well spent and not wasted on unnecessary medical testing.”
UTC/RenRX agreed to pay $41.6 million, with another $1 million to be paid by three principals of the firm: Tarun Jolly M.D., the company’s founder and CEO at the time of the alleged wrongdoing; Patrick Ridgeway, and Barry Griffith.
The federal investigation that led to the allegations was conducted by the U.S. Attorney’s Office for the Eastern District of Louisiana and the Department of Justice’s Civil Division, in conjunction with the Department of Health and Human Services Office of Inspector General, and the FBI.
UTC/RenRX was founded in 2012. Two years later, the company purchased a 32,600-square-foot downtown office building for $4.75 million, announced expansion plans that included creating 425 new jobs, and won a minority-stake investment from TPG Growth, the middle market and growth equity investment platform of global investment firm TPG.
But the following year, UTC/RenRX suspended its expansion plan after it lost federal funding for a Medicare study of 250,000 patients that would have given the company up to $600 for every participating patient, The Advocate newspaper reported at the time.