A Fountain Valley clinical laboratory and its co-owner have agreed to pay $1.25 million to resolve federal allegations that they paid volume-based commissions to marketers and structured the invoices to look like flat fees, the U.S. Attorney’s Office for the Eastern District of California announced on November 6, 2026. It is at least the third announced resolution to come out of a whistleblower lawsuit brought by two men with roots in the laboratory marketing business.
According to the Justice Department, Lab Genomics LLC and owner Leena Dalal knowingly and willfully paid value- and volume-based commissions to three independent contractor marketers from January 2020 through September 2022. The payments allegedly were meant to induce the marketers to arrange for or recommend that healthcare providers order and refer laboratory tests to Lab Genomics. The government further alleges the defendants knew the payments did not comply with the Anti-Kickback Statute, making resulting claims actionable under the False Claims Act. The release refers to Medicare, Medicaid and other federally funded programs, while the covered conduct defined in the settlement agreement is limited to Medicare claims. These are allegations only. There has been no determination of liability, and the agreement states it is not an admission by the defendants.
The settlement agreement supplies details the press release does not. It describes Dalal as a founder and co-owner, designates $625,000 of the payment as restitution, and spreads the obligation over four principal installments of $312,500 through August 2027, with 4 percent annual interest bringing the scheduled total to $1,301,095.89. An uncured default would accelerate the balance at 12 percent interest and could lead to exclusion from federal health programs until the balance is paid. The agreement does not mention a corporate integrity agreement, and it does not release criminal liability or the government’s administrative rights, including exclusion.
The whistleblowers, Sunil Wadhwa and Ken Newton, will receive $225,000, or 18 percent of the settlement. The False Claims Act sets a range of 15 to 25 percent when the government proceeds with a whistleblower’s case. The Justice Department earlier identified the pair as co-founders of Financial Halo LLC/MedXPrime, a former third-party marketer for Admera Health LLC, which agreed in July 2024 to pay $5,389,648 to resolve claims from their suit, with $862,343 going to the relators. In December 2025, Virginia’s NEXT Bio-Research Services LLC agreed to pay at least $758,000, with $113,700 to the relators, over alleged sham physician fees and marketer commissions. By this publication’s tally, the three announced settlements total at least about $7.4 million, roughly $1.2 million of it to the whistleblowers. The release captions the suit as United States ex rel. Wadhwa and Newton v. Admera Health, LLC, et al. (E.D. Cal.), while the agreement lists it as United States ex rel. Wadhwa, et al. v. Lab Genomics, LLC et al., No. 2:19-cv-01288-JAM-JDP.
U.S. Attorney Eric Grant said in the release that “It is unlawful to evade the safeguards that protect federal health care programs.” HHS-OIG’s Miranda L. Bennett said such schemes put financial incentives ahead of independent medical decision-making. The release also ties the case to the Administration’s new Task Force to Eliminate Fraud and National Fraud Enforcement Division. The Civil Division’s Fraud Section and the Eastern District handled the matter with assistance from HHS-OIG.
Commission arrangements with outside sales contractors have drawn government attention for years. In United States ex rel. Lutz v. Mallory (4th Cir. 2021) 988 F.3d 730, the Fourth Circuit upheld a judgment of more than $100 million in a case involving volume-based commissions that blood-testing laboratories paid to independent sales contractors. The picture is more nuanced under the separate Eliminating Kickbacks in Recovery Act (EKRA), which is not cited in the Lab Genomics release. In United States v. Schena (9th Cir. 2025) 142 F.4th 1217, the Ninth Circuit said percentage-based pay for marketers, without more, is not a per se EKRA violation, while affirming the conviction of a lab operator whose marketers were directed to mislead referring providers. The Lab Genomics settlement resolves no such legal question.
The broader enforcement climate remains active. The Justice Department reported more than $6.8 billion in False Claims Act recoveries for fiscal 2025, a single-year record, with over $5.7 billion tied to health care and a record 1,297 whistleblower suits filed.
For insurers and employers, the case involves federal programs only. Neither the release nor the agreement mentions private insurance or workers’ compensation. But the same sales practices can reach other payers. EKRA extends to private plans, and according to an analysis by the law firm Mintz, the Justice Department in a September 25, 2026 Federal Register notice denied a clinical laboratory trade group’s request to permit variable pay for employed sales representatives, citing concerns that volume-linked pay can compromise patient choice, encourage overutilization and raise costs. In California’s workers’ compensation system, Labor Code § 3215 separately makes it a crime, except as otherwise permitted by law, to offer or accept consideration for referring clients or patients for compensation services.