Mystery van that collected DNA samples and Medicaid info in Louisville shuts down

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WATCH: Louisville officials are concerned about a group collecting health information in low-income areas – Apr 17, 2019

A company accused of offering cash and collecting DNA samples in poor neighbourhoods of Louisville, Ky., has closed, citing “negative publicity” following a Global News investigation.

The company, Freedom Medical Labs LLC, was handing out $20 and collecting people’s DNA samples and Medicaid information in low-income areas of Louisville, Ky., Global News previously reported. Its employees worked out of an unmarked white van and claimed to be conducting surveys and collecting cheek swabs for cancer-screening tests that would be covered by health insurance, witnesses say. Each cheek swab is potentially worth up to $8,000 in insurance payouts for the lab conducting the test, although it’s only covered when a doctor deems it to be medically necessary.

READ MORE: Why an unmarked van offered cash for DNA samples in low-income areas of Kentucky

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State officials and Louisville community leaders say they’re concerned someone might be taking advantage of the city’s poorest by cashing in on their health insurance for pennies on the dollar.

“Twenty dollars means everything to these people because we have one of the worst shortages of affordable housing in the country,” said Louisville Coun. Barbara Sexton Smith, who represents some of the city’s lowest-income neighbourhoods. “They’re preying on the low-income (citizens) and they’re preying on people who are impoverished,” she told Global News.

The Kentucky attorney general’s office has issued a scam alert regarding a “suspicious van” and reports of a group paying cash for DNA and health insurance information. The AG’s office is urging anyone who has turned over their info to call Medicaid’s fraud hotline.

Freedom Medical Labs, which is based out of a residential address in Silver Spring, Md., dissolved last Monday after Global News linked it to the van in a story on Apr. 6. The company did not appear to have a physical lab but instead operated as a medical marketing company that called itself Freedom Health.

An individual claiming to offer cancer screening, right, conducts tests alongside their van in Louisville, Ky., in late March 2019. Courtesy of Tara Bassett

Freedom Health president Robert Alan Richardson says the company shut down due to “recent negative publicity” surrounding its operations in Louisville. He also denies paying patients for their DNA.

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“No one was paid for any patient specimens,” Richardson told Global News. He says patients were paid $20 to complete a health survey, and that the DNA was collected for “unrelated” research into how certain genes respond to pharmaceutical drugs. He says each patient signed a form stating that they provided the samples freely and “were not compensated in any way.”

“The specimen testing is entirely voluntary, legal, and a covered benefit under the patients’ insurance plans,” he said in a written statement. Richardson added that no testing is done without an order from the patient’s physician.

Richardson says all samples were sent to fully accredited labs to be tested and referred to the patient’s doctor. He says Freedom Health complied with all state and federal laws, and enlisted a health care compliance attorney to make sure patients’ privacy was protected.

Robert Alan Richardson, president of Freedom Medical Labs LLC, is shown in this April 2017 photo.
Robert Alan Richardson, president of Freedom Medical Labs LLC, is shown in this April 2017 photo. Robert Alan Richardson/Facebook

The Louisville police department’s fraud team has looked into the matter. However, they say it’s not illegal to pay someone for their DNA.

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Louisville resident Claudette Perkins, who provided her sample to the Freedom Health team in March, says she felt tricked by the operation.

“They’re hustling on the poor people in town,” she told Global News. Perkins says she gave them her Medicaid number, social insurance number, signature and cheek swab.

READ MORE: Privacy risks lurk in DNA tests, experts warn

Perkins, 64, says she needed the money to help pay for a storage locker that held all of her belongings. “That’s the only reason I took it — the money — because I assumed that this was legal,” she said.

Freedom Health employees set up outside soup kitchens in Louisville and offered $20 for people to take a Medicaid survey, according to Tara Bassett, a witness and mental health advocate for the homeless.

“They were like carnival barkers and they were just grabbing people off the end of the (soup kitchen) line and bringing them around the corner and shuffling them through,” Bassett told Global News. “These guys were obviously targeting them.”

Accredited genetics lab cuts ties with Freedom Health

Crestar Labs, a federally accredited genetics lab in Spring Hill, Tenn., says it has ended its business relationship with Freedom Health in light of Global News’ investigation.

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The company says it made the decision after Global News asked about two shipping labels that show Crestar sent packages to Freedom Health in Maryland and Louisville. Crestar had been using Freedom Health to market its services, the company said.

“Crestar Labs categorically denies any wrongdoing in connection with this matter as it had absolutely no involvement in any misconduct that may have been engaged in by Freedom Health,” a Crestar spokesperson told Global News in a statement.

The labels show that Crestar shipped packages to Ed Burch, a business associate of Richardson’s, at Burch’s home address in Maryland and at a hotel in Louisville. Burch and Richardson were business partners in a separate medical supply company.

Burch did not respond to requests for comment.

This shipping label shows Crestar Labs sent a package to Ed Burch of Freedom Medical Labs. The address corresponds to the Galt House Hotel in Louisville, Ky. Courtesy of Barbara Sexton Smith

“Crestar Labs cannot say whether any of the alleged improprieties made about Freedom Medical Labs in the news report are true or not,” the Crestar spokesperson said. “However, in an abundance of caution, Crestar Labs decided to exercise its option to terminate its business relationship with Freedom Health without cause.”

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Crestar says no testing of any kind is supposed to occur “without an order from a patient’s physician, based upon standardized medical necessity guidelines.”

In separate statements, both the Crestar spokesperson and Richardson said: “It is not illegal for clinical laboratories to market their services to patients.”

Offering cancer tests far and wide

Freedom Medical Labs is one of several medical marketing companies offering cancer screening across the U.S.

These companies started recruiting contractors late last year to canvas the country offering a new form of “free” DNA testing, several contractors told Global News. The regulator-approved test can identify the genetic markers linked to certain types of hereditary cancer, which can be useful for at-risk individuals who might require closer monitoring.

Many health insurers will cover these tests, which can otherwise cost up to $8,000 per person. However, insurers will only cover the tests when a doctor deems them to be medically necessary.

Sales reps offering these tests have reportedly been spotted at health fairs, community centres, seniors’ homes and even soup kitchens in over a dozen states.

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“It’s the Wild West as far as inherited cancer testing, and that’s really inappropriate,” said Dr. William Kearns, who runs the Advagenix testing lab in Rockville, Md.

Kearns’ lab works with medical marketing companies to collect and process genetic tests, but he says he’s never worked with Freedom Medical Labs. Advagenix’s doctors review each sample they receive to ensure that testing is medically necessary, Kearns told Global News. He says a patient is eligible if they have a family history of certain forms of cancer, such as breast cancer.

However, he’s concerned that others might be collecting samples from “invalid” candidates in order to bill unnecessary tests to Medicare and Medicaid.

“We would never do something like that,” said Kearns, who is also a leading geneticist at Johns Hopkins University’s School of Medicine.

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Colorado-based MedVantage Consulting LLC markets these DNA tests to people with insurance coverage and a family history of cancer. MedVantage chief executive Duane Henneman says his team only refers patients when the tests are medically necessary, and his contractors never pay for samples.

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“We have over 200 HIPAA (Health Insurance Portability and Accountability Act)-certified consultants in over 30 states,” he told Global News. Henneman says his contractors earn commission fees for every valid candidate they bring in for testing.

“Tests will come back to the lab between $6,000-$8,000,” he said. “We pay our consultants 15 per cent of that based on what is approved and paid to us.”

MedVantage operates in several regions, including the Louisville area.

Henneman says there are several other medical marketing firms that funnel tests back to labs like Crestar and Advagenix. “We contract with the labs, and the labs bill Medicaid or the labs will bill Medicare,” he said. “Medicare has never heard of MedVantage. Never. There’d be no reason to.”

READ MORE: Did your genetic test flag that you’re at risk of a terrible disease? Don’t panic, experts say

An ex-contractor with a rival marketing company says she was paid $500 to collect 15 samples per week. She would collect cheek swabs at a booth that she set up in low-income areas of a state bordering on Kentucky. She said she never offered money for tests. Instead, she entered people’s Medicaid numbers into a smart phone app to see if they were eligible for the insurance payout. Only eligible candidates would be tested.

“We were told once we take the swab, it doesn’t have anything else to do with us,” said the former contractor, who asked to remain anonymous.

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Genetic data has become a valuable commodity in the pharmaceutical industry. Researchers are using the data to see how individual genes respond to various drugs — a field known as pharmacogenetics. The research is expected to yield more patient-specific treatments in the future.

Crestar just announced a deal to organize its genetic testing data into a central database for cancer and pharmaceutical research.

“All of our genetic data that is derived from patient sample analysis will be stored and managed in a usable way for evidence-based medicine, translational medicine and research,” Crestar’s spokesperson said.

When asked if that data might be shared with law enforcement, Crestar said it will not be available “to organizations outside of Crestar or its affiliates.”

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Louisville patient Claudette Perkins says she hasn’t received any test results back from Crestar or Freedom Health. She’s not even sure who has her DNA samples right now, and she worries that it might have fallen into the wrong hands.

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“I gave the people all my personal information and I’ve been waiting for what’s going to happen to me now,” she said. “In the back of my mind, I’m wondering … what’s going to fall out?”

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