Clinical laboratories have remained a consistent focus of government enforcement in recent years, and the latest settlements show that this scrutiny is far from slowing down.
In a November 24, 2025 press release, the Department of Justice announced that an Indiana laboratory agreed to pay more than $9 million to resolve claims that it violated the False Claims Act (FCA) and the Anti-Kickback Statute (AKS). According to the government, the lab knowingly submitted claims to Medicare for respiratory pathogen panels (RPPs) that were either not medically necessary or tied to improper referral arrangements. The government further contended that the lab paid commissions to independent sales representatives and marketing firms based on the volume or value of referrals, structures prohibited under the AKS because the individuals receiving commissions were not bona fide employees.
Just days earlier, on November 20, 2025, the DOJ announced another settlement involving an Arizona laboratory. The government alleged that the lab entered into service agreements with an infection-prevention company that purported to provide marketing and management support to long-term care facilities. In the government’s view, these agreements functioned primarily as a vehicle to pay the company for referral volume. The DOJ also maintained that the company performed specimen collection for infectious disease testing (swabbing residents for COVID-19) and that the lab allegedly used those same specimens to perform and bill Medicare for medically unnecessary RPPs. Notably, Medicare reimbursement for the RPPs was roughly ten times higher than payment for COVID-19 tests, and the government alleged that nearly every resident in certain facilities received the same panel of respiratory tests. The Arizona lab agreed to pay $1.65 million to resolve these claims.
These enforcement actions highlight two significant issues that should be addressed, audited and monitored in every lab’s compliance program: medical necessity and marketing activities. Gone are the days when labs could reasonably believe that medical necessity was “not their problem.” Labs should consider putting in place mechanisms to help ensure that they can demonstrate (if and as needed) that the tests they performed were medically necessary. In addition, arrangements with marketers should be carefully reviewed to ensure they meet legal requirements, particularly with respect to the services the marketers provide as well as the compensation that is being paid to marketers by the labs. It is important to note that the claims resolved by the settlements are allegations only and there has been no determination of liability. Nevertheless, the enforcement actions demonstrate the costs associated with government investigations, not only in terms of dollars and cents, but also in terms of time and potential reputational harm. Having an effective compliance program that contains robust processes to detect and prevent issues can go a long way in helping to avoid or mitigate these significant costs.