Genetic Testing Company Agrees to Pay $1.99 Million to Resolve Allegations of False Claims to Medicare for Medically Unnecessary Tests

The Justice Department announced today that GenomeDx Biosciences Corp. (GenomeDx) has agreed to pay $1.99 million to resolve allegations that it violated the False Claims Act, 31 U.S.C. §§ 3729 et seq., by submitting claims to Medicare for the Decipher® post-operative genetic test for prostate cancer patients.  GenomeDx is a genetic testing laboratory headquartered in Vancouver, British Columbia, with operations based in San Diego. 

“The Department of Justice is committed to ensuring that Medicare reimburses costs for laboratory testing that are reasonable and necessary for the individual patient,” said Assistant Attorney General Jody Hunt for the Department of Justice’s Civil Division.  “Medically unnecessary and unproven testing increases costs for federal health care programs.”

The United States alleged that GenomeDx knowingly submitted claims for the Decipher test to Medicare between September 2015 and June 2017 that were not medically reasonable and necessary because the prostate cancer patients did not have risk factors necessitating the test, including pathological stage T2 disease with a positive surgical margin, pathological stage T3 disease or rising Prostate-Specific Antigen (PSA”) levels after an initial PSA nadir.

“As this settlement demonstrates, we are committed to protecting the integrity of the Medicare program and will hold health care providers accountable under the False Claims Act when they engage in improper billing,” said Robert S. Brewer, Jr., United States Attorney for the Southern District of California. “This settlement is also another example of our commitment to vigorously investigate cases brought to our attention by whistleblowers. We commend the two employees of GenomeDx who had the courage to come forward and work with investigators.”

“Lab tests and other medical services should only be conducted or provided when medically necessary,” said Christian J. Schrank, Special Agent in Charge for the Office of Inspector General of the U.S. Department of Health and Human Services.  “Whistleblowers play a critical role in keeping entities honest and accountable, and are encouraged to report suspected waste, fraud and abuse by those billing federal healthcare programs.”

“The message is clear, if you take advantage of programs like Medicare, you will be held accountable,” said John Brown, FBI Special Agent in Charge of the San Diego Field Office.  “Companies who engage in filing false claims to generate more corporate revenue are not only stealing from the federal taxpayer, but also from people who rely on federally funded programs for their health care needs.”

The settlement resolves allegations originally brought in a lawsuit filed under the qui tam or whistleblower provisions of the False Claims Act, which allow private parties to bring suit on behalf of the government and to share in any recovery.  The whistleblowers will receive $348,316.50 from the False Claims Act recovery. 

The investigation was conducted by the Civil Division of the Department of Justice, the U.S. Attorney’s Office for the Southern District of California, the Department of Health and Human Services Office of Inspector General, and the Federal Bureau of Investigation. 

The case is captioned United States ex rel. La Fleur et al. v. GenomeDX Biosciences Corp., No. 17-CV-1959 (S.D. Cal.).  The claims resolved by the settlement are allegations only, and there has been no determination of liability.