Genova Diagnostics Lawsuit: $43 Million Settlement and Compliance Terms

The Genova Diagnostics lawsuit was a whistleblower case that ended on April 27, 2020, when the Asheville, North Carolina clinical lab agreed to pay up to $43 million to settle federal allegations that it billed Medicare, TRICARE, and the Federal Employees Health Benefits Program for lab tests that were not medically necessary. The suit had been filed under the False Claims Act by the company’s former chief medical officer, Dr. Darryl Landis, and named Genova, its holding company GNVA Holdings Inc., then-CEO Chris Smith, and private equity owner Levine Leichtman Capital Partners V, L.P. as defendants.¹²

What the Government Alleged

The Department of Justice alleged that Genova submitted false claims to federal health programs for three test profiles: an IgG allergen panel, NutrEval, and GI Effects. The government’s position was that none of the three met the medical necessity standard required for reimbursement, and that Genova used improper billing techniques to secure payment.¹

The IgG allergen test measures antibodies to foods as a way to detect food intolerances. The American Academy of Allergy, Asthma, and Immunology and the American College of Allergy, Asthma, and Immunology have stated that IgG food allergy tests “do not have clinical relevance, are not validated, lack sufficient quality control, and should not be performed.”³ GI Effects assessed 46 biomarkers of gastrointestinal function through stool testing, and NutrEval evaluated nutritional status.

The government also alleged that Genova violated the Stark Law, which prohibits physician referrals to entities with which the referring physician has a financial relationship. The company allegedly paid three phlebotomy vendors in a way that created those prohibited ties.¹ According to the complaint, Genova received more than $21 million in Medicare and Medicaid reimbursements for the panels between July 2015 and June 2017.²

Genova settled without admitting guilt or wrongdoing, and the DOJ noted that the claims were allegations only, with no determination of liability.¹

Who Brought the Case

Landis served as Genova’s chief medical officer from 2012 to 2017. According to the complaint filed in the Western District of North Carolina, the company hired him specifically to develop medical necessity evidence for the three test profiles. He concluded that no adequate evidence supported them and advised Genova not to bill Medicare, TRICARE, or private insurers for the tests.⁴ Landis said his warnings began in earnest in July 2015, around the time Blue Cross Blue Shield announced it would stop covering Genova’s stool tests.⁵

The complaint alleged that then-CEO Chris Smith dismissed Landis’s concerns as “overly conservative,” that the company cut his department’s budget, and that leadership repeatedly excluded him from meetings. Genova fired him after what the complaint described as a false accusation of “employment related misconduct.”⁵

As the qui tam relator, Landis was entitled to 15 percent of the recovery — roughly $6 million to $6.5 million.¹

How the $43 Million Settlement Works

The resolution came in two parts. Genova first forfeited about $17 million in claim funds that Medicare and TRICARE had been holding in suspension, meaning money the company had billed but not yet been paid. The HHS Office of Inspector General recorded the exact figure as $17,400,737.⁶

Over the following five years, Genova was required to pay the government 13 percent of net annual revenue exceeding $100 million and 20 percent of any asset sales over $1 million. Those contingent payments were capped at $26 million, bringing the total potential liability to roughly $43 million.⁵

Compliance Obligations After the Settlement

Genova entered into a five-year Corporate Integrity Agreement with the HHS Office of Inspector General, effective April 17, 2020 through June 24, 2025. The agreement required the company to establish a compliance program, engage an independent review organization, form a compliance committee, and create a confidential disclosure channel for employees. The agreement is now listed as closed, and no subsequent enforcement actions appear in the public record.⁶

Is Genova Still Operating?

Genova continues to operate as of 2026. Its current product lineup still includes GI Effects and NutrEval, two of the panels at the center of the lawsuit, along with newer offerings such as an Alzheimer’s assessment and the Alcat food sensitivity test. The company also runs a direct-to-consumer ordering platform called Genova Connect.⁷ Levine Leichtman Capital Partners, the Los Angeles private equity firm that acquired Genova in a 2013 management buyout, remained the owner and was itself named as a defendant in the whistleblower suit.⁸

1
U.S. Department of Justice. Testing Laboratory Agrees to Pay $43 Million to Resolve Allegations of Medically Unnecessary Tests
2
Quackwatch. Genova Diagnostics Settles False Claims Act Violations
3
South Carolina Blues. Allergen Testing
4
G2 Intelligence. Lab to Pay Up to $43 Million After Disregarding Employee’s False Billing Concerns
5
Mountain Xpress. Genova Diagnostics Settles Billing Fraud Claims for Up to $43M
6
HHS Office of Inspector General. Genova Diagnostics Inc. Corporate Integrity Agreement
7
Genova Diagnostics. Products
8
Levine Leichtman Capital Partners. Levine Leichtman Announces the Acquisition of Genova Diagnostics