Genetic Testing and DME Kickback Investigations: How These Cases Are Defended Now

The government builds a genetic testing or DME kickback case out of three things: bank records showing what you were paid per sample or per order, invoices describing those payments as something else, and texts where somebody talks about volume. What decides the case is a fourth thing most targets never consider until it is too late. Whether the physician who signed the order was making a real decision. Federal appellate law has moved hard on that question, and it has changed how a laboratory, marketing company, telemedicine platform or DME supplier defends one of these investigations.

Bank records, invoices and texts build the case. Whether the ordering physician made a real decision is what decides it.

Key Takeaways

• Federal kickback exposure runs to 10 years per count under 42 U.S.C. 1320a-7b, plus stacked counts under 18 U.S.C. 1347 and 1957.
• The Fifth and Seventh Circuits now require proof that the payee intended to improperly influence the person making the healthcare decision.
• Physician declination rates, disclosure of the lab on the requisition, and documented compliance checks are the evidence that wins these cases.
• Florida sits in the Eleventh Circuit, which reads referral more broadly, so the record has to be built as a factual defense, not a legal one.
• The decisions that set the loss figure and the charges happen before indictment, at the subpoena and target letter stage.

What the Government Has Before It Knocks

By the time agents appear, the file is built. Claims data flagged the billing entity as an outlier. Bank subpoenas produced the payment history. The telemedicine platform or the call center has already produced its scripts. Someone in the chain, usually the person with the least exposure and the best lawyer, has already sat down with the government.

The 2025 national takedown charged 324 defendants with more than $14.6 billion in alleged fraud, much of it laboratory, genetic testing, DME and telemedicine work. Florida remains the densest pipeline in the country, and the 2026 posture has not softened.

By the time agents appear, the file is built. Claims data, bank subpoenas and a cooperating witness usually come first.

The theory is always the same. A payment tied to the number of samples or orders is remuneration, the remuneration induced referrals, and the claims that followed were tainted. What has changed is what the government must prove about the middle step.

The Question That Now Decides These Cases

The Anti-Kickback Statute makes it a felony to pay or receive remuneration to induce a referral or the ordering of any item or service billed to a federal health care program. 42 U.S.C. 1320a-7b(b). Congress never defined referral, and the courts are filling that gap.

The Fifth Circuit held in United States v. Marchetti, 96 F.4th 818 (2024) that the structure of a compensation contract by itself does not produce a conviction. The government must prove intent to improperly influence the person who makes the healthcare decision. It applied the same framework in United States v. Cockerell, 140 F.4th 213 (2025), where the influence was obvious: preloaded prescription pads, lavish travel, and offers of investment in management service organizations.

The Seventh Circuit went further in United States v. Sorensen, 134 F.4th 493 (2025), reversing a DME distributor's conviction outright. Marketers faxed prefilled brace orders to physicians and roughly 80 percent were never returned. The court called those communications proposals for care rather than referrals.

We covered that divide in our post on the circuit split. The consequence for a Florida target is that the same facts winning an acquittal in Chicago have to be presented here as a challenge to intent and as sentencing argument.

The Record That Wins, and When It Gets Created

Most of the evidence that decides a kickback case is created while the business is running, long before anyone has a lawyer. Five categories matter.

Declination rates. What percentage of requisitions came back unsigned? In the cases that went the defense's way, physicians ignored most of what was sent. If nobody has run that number, the government will run it first and describe it its own way.

Disclosure on the form. Did the requisition name the laboratory, so the ordering physician could have crossed it out and sent the specimen elsewhere? A disclosed selection that a physician can override looks like marketing. A hidden one looks like steering.

A disclosed selection that a physician can override looks like marketing. A hidden one looks like steering.

Compliance checks. Did the laboratory reject samples that failed a check, and can an employee testify to it? Rejections that cost the company money are the most persuasive evidence a defense lawyer can put before a jury.

Medical necessity language. Did the order state that the physician's signature certifies medical necessity, and did the cover letter tell the physician to confirm the diagnosis codes? That language does work at trial.

The payment file. Per-sample and per-order payments are not by themselves illegal after Marchetti, and volume-based marketing compensation survived in Sorensen. What convicts people is concealment. Sham invoices describing marketing hours that nobody worked, consulting agreements for services nobody performed, loan paper that repays nothing, and ownership interests created after the fact are the difference between a documentation problem and a criminal intent case.

Where Each Player Sits

Laboratory and marketing company owners. Highest exposure, because you signed the agreements and took the money. The defense lives or dies on the payment file and on whether the arrangement was disclosed to prescribers.

Ordering physicians. Usually a witness first, and the government will offer to keep it that way in exchange for a statement. Get your own lawyer before that conversation. Licensure and Medicare enrollment are on the table even when charges are not.

Sales reps and 1099 marketers. Easiest in the chain to charge, and easiest to flip. Know which one you are being offered before answering a single question.

Telemedicine and DME operators. The doctor chase originates with you, and the HHS-OIG special fraud alert on telemedicine arrangements, published at 87 Fed. Reg. 51749, is the roadmap the government uses to evaluate your contracts.

Exposure, and Why the Loss Number Is the Real Fight

A single kickback count carries 10 years and a $100,000 fine. 18 U.S.C. 1347 adds 10 years per count. Conspiracy under 18 U.S.C. 371 or 18 U.S.C. 1349 travels with them, and money spent on cars or homes brings counts under 18 U.S.C. 1957.

The sentence imposed, though, comes from the guidelines. The driver is the improper benefit or the loss attributed to the arrangement under USSG 2B4.1 and 2B1.1. The government's opening number is usually the full Medicare reimbursement paid to the billing laboratory, even where the client is a downstream marketer who received a fraction of it. Moving that number is worth more prison time than any other argument in the case, and the groundwork is laid before indictment.

The government's opening loss number is usually the full Medicare reimbursement paid to the billing laboratory, even for a downstream marketer who received a fraction of it.

Exclusion from Medicare and Medicaid follows conviction, which ends any business that bills a federal program and, for a physician, usually ends the practice.

The Mistakes That Cost People the Defense

Talking to agents at the door. They arrive with the invoices and the texts. The interview exists to lock in a statement they can impeach later.

Producing records in response to a grand jury subpoena, an HHS-OIG subpoena or a civil investigative demand without counsel. The production defines the case, and an incomplete one creates obstruction exposure.

Cleaning up the paperwork. Reissuing an invoice, backdating an agreement or coaching a marketing partner turns a defensible case into an obstruction case.

Assuming a lawyer's opinion letter from three years ago settles it. A safe harbor protects an arrangement only if the facts matched the paper. Prosecutors read the paper against the bank records.

Sharing a lawyer with the company or with a business partner. Interests diverge the moment one person gets a better offer.

What Early Defense Work Accomplishes

Before charges, three things are open: whether the client is charged, what he is charged with, and what loss figure the government adopts. None are visible from outside. All are movable from inside.

The work is concrete. Reconstruct the declination and rejection data from the company's systems. Collect the requisitions and cover letters showing disclosure and certification. Identify employees who can testify to compliance checks. Map every payment against the agreement that supposedly explains it, and find out now whether the explanation holds. Then decide, with real information, whether to litigate or resolve.

A reverse proffer, where the government walks defense counsel through its evidence before anyone commits to a path, is one of the most undervalued tools in federal practice. It is also unavailable to a client who has already talked.

Common Questions

Under Investigation Over a Laboratory, Genetic Testing or DME Marketing Arrangement?

AMC Defense Law represents laboratory owners, marketing companies, telemedicine and DME operators, sales representatives and physicians in federal Anti-Kickback Statute and health care fraud investigations, in South Florida and nationwide, including matters charged in other districts. If agents have made contact, or a subpoena, civil investigative demand or target letter has arrived, the firm can review the arrangement and the records with you and advise on next steps. Consultations are confidential.

The decisions that set the loss figure and the charges happen before indictment. That is where AMC Defense Law does its work.

If you or your loved ones have been arrested or are under federal investigation over a laboratory, genetic testing or DME arrangement, call Aaron M. Cohen for a confidential consultation, 24 hours a day to get help.

This article is for general information only and is not legal advice. Reading it does not create an attorney-client relationship. Federal criminal law changes, and outcomes depend on the facts of each case. Anyone facing a federal investigation or charge should consult qualified counsel about their own situation.

About the author: Aaron M. Cohen is the founder of AMC Defense Law, a federal criminal defense firm in Boca Raton, Florida. He is admitted to practice in Florida (Florida Bar No. 541427) and New York, and before the United States District Courts for the Southern District of Florida and the Southern District of New York. The firm represents clients in federal investigations and prosecutions involving healthcare fraud, Anti-Kickback Statute matters, DME and telemedicine fraud, peptide and compounded-drug enforcement, controlled-substance and drug conspiracy cases, financial crimes, and complex federal litigation, in Florida and nationwide.