DOJ Intensifies Crackdown on Healthcare Fraud in Diagnostic Testing Industry

Federal authorities have significantly ramped up enforcement actions against diagnostic testing companies and laboratories, with the U.S. Department of Justice’s 2025 National Health Care Fraud Takedown resulting in charges against 49 defendants linked to over $1.1 billion in fraudulent claims related to telemedicine and genetic testing.

Several enforcement patterns have emerged over the past year, providing critical insights into the government’s priorities and offering valuable compliance guidance for healthcare organizations navigating an increasingly scrutinized regulatory landscape.

Illegal remuneration schemes continue to draw intense federal attention, with multiple diagnostic companies facing substantial penalties for Anti-Kickback Statute (AKS) violations. In December 2025, Virginia-based NEXT Molecular Analytics agreed to pay $758,000 to resolve allegations that it knowingly paid kickbacks disguised as consulting fees to induce laboratory referrals. The company also reportedly paid marketing contractors commissions directly tied to physician referrals.

Similarly, LTD Holding LLC (formerly Labtech Diagnostics) and its CEO agreed to a $6.8 million settlement after allegedly providing kickbacks for testing referrals. The company also pleaded guilty to five counts of violating the AKS, underscoring the Justice Department’s unwavering commitment to targeting compensation arrangements designed to influence referral patterns.

The enforcement landscape grew more complex in 2025 when the Ninth Circuit issued its landmark interpretation of the Eliminating Kickbacks in Recovery Act (EKRA) in United States v. Schena. Unlike the AKS, which applies only to federally funded programs, EKRA covers remuneration for services reimbursed by private payers as well, creating a broader enforcement framework.

The court clarified that while percentage-based payments to marketers aren’t automatically unlawful under EKRA, they become problematic when combined with “undue influence” – such as targeting less sophisticated providers, misrepresenting testing capabilities, or promoting tests without regard for medical necessity. This ruling effectively expanded EKRA’s reach by establishing that both healthcare providers and their marketers can face liability.

Medical necessity has emerged as another critical focus area for regulators. In May 2025, Gulfcoast Eye Care paid $615,000 to resolve allegations it submitted claims for medically unnecessary trans-cranial doppler ultrasounds. According to investigators, the company informed patients of serious diagnoses before receiving test results to qualify them for reimbursed procedures, despite patient histories and test results not supporting such diagnoses.

This pattern of scrutiny continued across the sector, with five Florida ophthalmology practices paying nearly $6 million to resolve similar allegations involving unnecessary ultrasounds.

Genetic testing has drawn particular attention. In November 2025, two telemarketing company operators were sentenced for soliciting Medicare beneficiaries for medically unnecessary cancer genetic tests, resulting in $17.3 million in fraudulent billing. The DOJ emphasized that cancer genetic testing is not diagnostic and covered by Medicare only under limited circumstances.

This enforcement trend has continued into 2026, with recent cases including a Florida man pleading guilty to submitting over $52 million in fraudulent claims for unnecessary genetic testing, and a Texas laboratory owner’s conviction in a $328 million cardiovascular genetic testing scheme.

Improper billing practices have also come under fire. Medical device manufacturer Semler Scientific and its distributor agreed to a $29.75 million settlement after allegedly submitting false claims to Medicare for photoplethysmography tests. The government contended Semler knew its tests didn’t meet applicable CPT code requirements and that Medicare didn’t cover such vascular tests, yet continued to submit claims and promote Medicare reimbursement to customers.

Industry experts recommend several compliance measures in response to these trends. Companies should maintain clear documentation establishing medical necessity before ordering tests and avoid volume-based payments to marketing contractors. Compensation should be structured at fair market value, determined in advance, without reliance on referral metrics.

Organizations should also implement oversight mechanisms to prevent deceptive marketing and ensure all sales arrangements include clear boundaries governing interactions with healthcare professionals. Finally, companies must validate that each test satisfies applicable coverage criteria and coding requirements before submitting claims, never promoting reimbursement without supporting medical documentation.

As federal enforcement in the diagnostic sector continues its aggressive trajectory, companies that invest in strengthening compliance programs—particularly around medical necessity documentation, compensation structures, and billing validation—will be best positioned to navigate the challenging regulatory environment.