Precision Medicine Testing Executives Face Federal Jail Time After Violating Anti-Kickback Laws for Pharmacogenetic Testing

Convictions emphasizes importance of paying attention to precision medicine financial arrangements

Recent convictions in federal court should serve as a warning to hospital leaders, clinical laboratory managers, and physicians involved in setting up precision medicine programs—and the pharmacogenetic testing that serves them—to be keenly aware of potential criminal liabilities should they violate anti-kickback laws.

Former US Attorney Joseph D. Brown, federal press release, Vantari pharmacogenetic testing case, indictments and convictions
Doctors should be aware of the emphasis that is being put on stopping fraudulent practices with genetic testing. “We continue to see individuals in the healthcare industry creating illegal kickback arrangements,” stated then US Attorney Joseph D. Brown (above), in a federal press release about the Vantari pharmacogenetic testing case. (Photo: Wikipedia)

Kickbacks in Exchange for PGx Referrals

In January of 2020, 12 individuals from three states were charged for their alleged role in a kickback conspiracy that saw more than $28 million change hands, according to a press release from the US Attorney’s Office, Eastern District of Texas.

On December 16, 2021, a federal jury in East Texas found Vincent Marchetti Jr. of Coronado, Calif., guilty of violating the Anti-Kickback Statute. Marchetti was one of 12 people charged under the pharmacogenetic testing scheme, and one of the first alleged conspirators to go to trial, according to a Jan. 26, 2021, federal press release.

“Fraud on our healthcare system cost taxpayers millions of dollars,” said US Attorney Brit Featherston in a statement. “The defendant convicted today, and the others prosecuted in this large conspiracy, will suffer their fate at the hands of our excellent justice system. All should know that an investigation and prosecution such as this takes thousands of hours of work by law enforcement and prosecutors.”

Another defendant, Nicolas Arroyo, CEO of Vantari Genetics, pled guilty to conspiracy to defraud the United States on the same day as the indictment, the press release noted.

Vantari Genetics is no longer in business, but according to a 2017 press release, Vantari was described as a “high complexity, CLIA certified laboratory offering clinical diagnostics, genetic testing, and contract research services across the health spectrum. The company offers a wide range of tests from routine blood and urine chemistry through next-generation sequencing for chromosomal aneuploides, hereditary cancer, and inherited diseases.”

Information from the US Attorney’s Office states, “Arroyo was the CEO of a clinical laboratory when he conspired with others to pay and receive kickbacks in exchange for the referral of and arranging for healthcare business, specifically pharmacogenetic (PGx) tests.” According to the US Attorney’s Office, the illegal arrangement involved referrals of PGx tests to clinical laboratories in Fountain Valley, Calif., Irvine, Calif., and San Diego.

Patients Are the True Victims

“Kickback schemes victimize patients seeking legitimate care and line the pockets of criminals who pay or receive them,” said Miranda L. Bennett, Special Agent in Charge of the US Department of Health and Human Services, Office of Inspector General, Dallas Region. “We will continue working with our law enforcement partners to protect the integrity of federal healthcare programs by exposing these harmful schemes and holding fraudsters accountable.”

The kickback scheme involving Marchetti and Vantari Genetics serves as a stark warning to those who violate anti-kickback laws. Marchetti and those who have pled guilty to the charges face up to five years in prison.

Personalized medicine is the future of modern healthcare, but close attention to its financial underpinnings is vitally important for those who are helping to implement precision medicine programs. 

—Caleb Williams

Related Information:

California Man Convicted of Federal Violations in Health Care Kickback Scheme

Twelve Indicted in Kickback Conspiracy, Former CEO Pleads Guilty

Two More Individuals Plead Guilty in Connection with Health Care Kickback Conspiracy

Getting Paid for Genetic Test Claims: Toolkit for Hospital Labs