Genetic Testing Fraud Whistleblower Lawsuit Results in $114.5 Million in Judgments

A whistleblower lawsuit has led to more than $114.5 million in civil judgments and settlements against a group of medical lab operators and individuals accused of orchestrating a fraudulent scheme to exploit state Medicaid programs through unnecessary cancer genetic testing.

The final major defendant in the case, Kevin S. Murdock—former CEO and owner of Premier Medical, Inc.—agreed to a consent judgment of over $27.5 million just one day before his trial was set to begin. Murdock acknowledged that there was a likelihood he would be found liable under the federal and state False Claims Acts.

This judgment adds to the more than $87 million previously secured by the federal government and multiple states against other defendants involved in the fraudulent operation.

The case was initially brought by Karen Mathewson, a former employee of Premier Medical, under the False Claims Act’s qui tam provisions, which allow private citizens to sue on behalf of the government and share in any financial recovery.  Under the False Claims Act, she will be entitled to a reward of between 15% and 30% of the amount the governments actually collect from the defendants.

The complaint filed by the U.S. government and various states alleged that Premier Medical and its executives, including Murdock and Michael Conroy, conspired with Freedom Medical Labs, LLC and its principals—Robert Alan Richardson and Edward Burch—to submit fraudulent claims for expensive cancer genetic (CGX) tests.

CGX testing is a type of genetic test that analyzes your DNA to detect inherited mutations in specific genes associated with an increased risk of developing certain cancers, such as breast, ovarian, colon, prostate, pancreatic, and melanoma cancers.  It is typically recommended for people with a personal or family history suggesting increased cancer risk—such as multiple cases of the same cancer in a family, cancers occurring at younger-than-usual ages, or rare cancer types.

The fraudulent scheme in this case targeted low-income Medicaid beneficiaries in states that reimbursed generously for CGX testing. According to court documents, the defendants paid illegal kickbacks and used misleading marketing tactics to collect DNA samples from vulnerable individuals, many of whom were approached at bus stops, dollar stores, and other public places.

Some of the defendants paid individuals up to $20 to provide DNA samples under the pretense of cancer screening and then used telemedicine providers—who had no treating relationship with the patients—to order the CGX tests. Premier Medical then submitted claims to Medicaid, seeking reimbursements of up to $12,000 per test.

The courts found that the claims were medically unnecessary and violated the Anti-Kickback Statute. Many beneficiaries never received test results, and the tests were not ordered by a legitimate treating provider.

A federal court issued a default judgment of more than $71 million against Premier Medical. Under law, default judgments accept the government’s allegations as true for the purposes of liability.

Robert Alan Richardson and Edward Burch each agreed to $8 million consent judgments, though the government accepted reduced payments based on their financial conditions. They admitted to certain misconduct and agreed that Freedom Medical would be excluded from federal healthcare programs for seven years.

Michael Conroy, the former Vice President of Compliance at Premier Medical, also resolved claims against him. He admitted to helping facilitate the fraud by shipping testing kits to marketers, checking patient eligibility, and coordinating with telemedicine providers.

Altogether, the federal and state governments recovered more than $114.5 million through judgments and settlements in the case.

The case underscores the government’s ongoing commitment to combating healthcare fraud, particularly schemes that exploit vulnerable populations and public health programs. The False Claims Act remains one of the most effective tools in this effort, providing whistleblowers with both financial incentives and strong legal protections.

Under the FCA, whistleblowers may receive 15% to 30% of any government recovery. They are also protected from retaliation such as termination, demotion, or harassment as a result of reporting misconduct.

If you have evidence of Medicare or Medicaid fraud, you may be entitled to a significant financial reward and legal protections as a whistleblower.  To scheduled a free and confidential consultation with an experienced whistleblower lawyer, call John Howley, Esq. today at 212-601-2728.