Tax Evasion and Fraud Case Signals New Scrutiny for Lab Billing Practices

The Genex Laboratories indictment reveals systemic enforcement risks in lab ownership, Medicare enrollment, and EHR-integrated billing

The case of Armen Muradyan, owner of Genex Laboratories, is a structural warning. With more than $11 million in unpaid taxes, fraudulent Medicare reimbursements, and misuse of COVID-19 relief funds, the case reveals how regulatory loopholes in lab ownership, Medicare enrollment, and financial reporting can be manipulated to sustain years of illegal activity with limited institutional detection.

Muradyan, who pleaded guilty in August to conspiracy to commit health care fraud, wire fraud, and tax evasion, concealed his involvement in Genex through the use of a shill owner to bypass a Medicare ban. He then laundered reimbursements through controlled accounts and fabricated tax filings to report little or no income, all while drawing millions in federal payments.

This isn’t just a one-off scheme. It’s a case study in how weak integration between health system data, financial oversight, and enforcement frameworks can allow flagged individuals to operate within the reimbursement system largely unchecked.

Shill Ownership as a Regulatory Blind Spot

The most telling feature of the case is its simplicity. When Medicare barred Muradyan from submitting claims, he didn’t vanish from the system, he substituted a friend. Using a stand-in named “L.S.” as the listed owner, Muradyan re-enrolled Genex under a false identity, opened corporate bank accounts in L.S.’s name, and continued business as usual.

Shill ownership is not a new tactic, but the ease with which it was used here is notable. While L.S. visited Genex periodically to collect $2,000 monthly payments and sign documents, he had no operational control. All business decisions, banking activity, and claims submission remained under Muradyan’s direction.

This raises serious questions about how the Centers for Medicare & Medicaid Services (CMS) validates ownership disclosures and what verification protocols exist to confirm real control of billing entities. In an era where digital enrollment systems are standard, the fact that one individual could re-enter the system so seamlessly after being banned indicates a significant policy gap.

For compliance officers and revenue cycle executives, this case should trigger immediate reassessment of lab vendor due diligence, especially in multisite systems with third-party reference testing.

The Role of Data Segregation in Financial Concealment

The scheme also depended heavily on fragmented oversight between healthcare billing and tax enforcement. For the tax years 2015 through 2020, Muradyan instructed L.S. to submit Genex’s earnings as personal income on tax returns—carefully underreporting profits or declaring losses. Meanwhile, Muradyan filed separate returns showing only $40,000 in annual income, excluding millions in Medicare revenue.

This bifurcation of reporting streams, one to Medicare, another to the IRS, went unchallenged for years. Between 2021 and 2023, Muradyan ceased filing returns altogether. Even then, no immediate federal lien or operational disruption occurred.

The broader issue is data disconnection. Medicare payments are traceable, but without integration between payment systems, tax reporting, and enforcement analytics, large-scale fraud can remain invisible for years. A 2023 GAO report emphasized that real-time audit mechanisms for matching provider payments with tax disclosures remain underdeveloped, especially for small-to-mid-sized private entities.

If the U.S. Department of Health and Human Services (HHS) and the IRS operated under a unified fraud detection framework, schemes like this would likely be caught earlier. For now, risk persists in the gaps between payer systems, not just within them.

COVID-19 Relief Abuse Extends the Pattern

In July 2020, Muradyan submitted a false Economic Injury Disaster Loan (EIDL) application under the name of a separate entity, GenMed. Claiming $800,000 in revenue and multiple employees, he received nearly $100,000 in taxpayer funds—despite GenMed having no staff and no income.

This is one of thousands of documented cases of pandemic relief fraud, but what distinguishes it is the continuity. Muradyan’s EIDL fraud was consistent with a long-standing pattern of deceptive structuring and fabricated documentation. He simply used the same playbook in a new federal program.

The Small Business Administration approved the loan, disbursed the funds, and faced no repayment until the Department of Justice initiated a broader fraud investigation. This again highlights the siloed nature of government funding oversight. Fraudulent actors often cross programs fluidly, exploiting fragmented vetting processes across CMS, SBA, IRS, and commercial intermediaries.

Health systems that rely on labs and diagnostics partners who operate under opaque ownership models are exposed to risk not only from overbilling, but from federal clawbacks, reputational damage, and operational dependency on potentially noncompliant vendors.

Implications for EHR-Integrated Billing Systems

Muradyan’s ability to process millions in claims raises a final and often overlooked issue: the role of EHR-linked lab ordering systems in enabling, or failing to prevent—illicit reimbursement activity.

It remains unclear whether Genex used a fully integrated electronic interface with health systems or relied on manual claim submissions. But as more health systems automate diagnostic ordering through EHR-connected workflows, the potential for embedded fraud grows. Once a lab is credentialed, it becomes part of a trusted ordering environment, often with minimal revalidation over time.

According to recent guidance from the Office of Inspector General (OIG), vendors with past exclusions or fraudulent affiliations must be flagged at the point of onboarding, not just during initial credentialing. This requires tighter interoperability between compliance tracking systems and EHR vendor directories.

Technology alone is not a safeguard. Systems must be structured to recognize red flags in real time, cross-reference provider exclusions, and trigger alerts across the clinical, financial, and legal teams. Otherwise, fraudulent entities can continue to extract public funds from within the infrastructure designed to protect them.