Florida Lab Owner to Pay US$27 Million for Fraudulent Cancer Tests

Published: 28 May 2024

Cancer CellsHurt has agreed to pay $27 million for defrauding the U.S. medical system via unnecessary cancer tests. (Photo: Darryl Leja, National Human Genome Research Institute (NIH), Flickr, License)

By Henry Pope

An American medical laboratory owner agreed to pay over US$27 million in restitution for defrauding the federal government’s health insurance program via a kickback scheme that falsified cancer diagnosis and treatment tests.

Daniel Hurt, a former owner of multiple cancer research laboratories, pleaded guilty in September 2022 to various offenses including health care fraud, violating the country’s anti-kickback statute, and money laundering.

He did this, authorities said, by fraudulently billing Medicare for cancer genomic tests “that were not medically necessary and were procured through illegal kickbacks.” Medicare provides federal health insurance coverage and payments for tens of millions of elderly Americans.

Cancer genomics is the study of how changes in a gene’s structure can affect cells which are known to cause cancer.

Working with co-conspirators, Hurt solicited kickbacks in exchange for Medicare referrals, in violation of the country’s anti-kickback statute. Prosecutors further said that, from January 2019 to November 2021, he conspired with telemarketers to procure patients for free yet unnecessary cancer tests, the costs of which would then be passed on to the federal government and, by extension, the American taxpayers.

“We will not tolerate those who prey on older Americans to defraud Medicare,” said Principal Deputy Assistant Attorney General Brian M. Boynton.

Hurt admitted during plea hearings that he defrauded the health care system for thousands of such tests. He also listed laboratories as the billing entity on his reimbursement requests that were not equipped to perform cancer genomic tests.

He admitted in September 2022 that the costs of each test exceeded $12,000 per patient; between January 2019 and October 2019, Medicare paid out more than $25 million in unnecessary cancer tests.

Millions from this amount were transferred by laboratory staff, at Hurt’s discretion, to bank accounts he controlled. Millions more were used in kickbacks for his co-conspirators.

The funds were laundered through sham contracts with his co-conspirators to give authorities the impression they were engaged in legitimate marketing, medical, and referral practices, prosecutors said.

“Medicare and Medicaid are two vitally important health care programs that provide critical services to millions of Americans,” said U.S. Attorney Philip R. Sellinger for the District of New Jersey. “Schemes that seek to siphon money from these programs with unnecessary medical tests are especially egregious.”

Hurt’s misdeeds were exposed thanks to whistleblower Robert Gerstein, who ran his fraudulent billing operations. Gerstein’s aid to prosecutors will see him rewarded with 17% of the government’s recovery, which amounts to $4.7 million.