The DNA of Medicare Fraud & the False Claims Act

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Genetic Testing Laboratory Pays $2 Million to Settle Allegations of Medicare Fraud

The Justice Department announced a settlement last month with GenomeDx Biosciences Corp. (“GenomeDx”), a genetic testing laboratory based in Vancouver, British Columbia with offices in San Diego. GenomeDx agreed to pay nearly $2 million to resolve alleged violations of the False Claims Act. According to the complaint, GenomeDx committed Medicare fraud by submitting false claims for its “Decipher” post-operative genetic test. The Decipher test measures the activity of genes in prostate tumors to evaluate the risk of cancer recurrence.

The qui tam action was brought by two whistleblowers, both of whom were former employees whose responsibilities included prior authorizations, billing and provider appeals. In the complaint, the United States and the relators asserted that the company’s conduct violated the False Claims Act, the Anti-Kickback Statute and the California Insurance Fraud Prevention Act.

Medically Unnecessary Testing

Between September 2015 and June 2017, GenomeDx allegedly submitted claims to Medicare for the Decipher test that were not medically reasonable and necessary because the prostate cancer patients did not have risk factors that warranted the test. The regional Medicare Administrative Contractor had granted limited Medicare coverage for the Decipher test to only those patients whose prostate-specific antigens dropped to an undetectable level within thirty days of surgery. However, GenomeDx allegedly billed Medicare on a routine basis without evidence that patients met the required condition.

Deceptive Billing Codes and Misleading Documents

Medicare was not able to detect the allegedly fraudulent billing because the claims were submitted under a billing code for an “Unlisted molecular pathology procedure.” Consequently, Medicare could not ascertain from the bill coding which claims were eligible for payment and which were not covered. GenomeDx allegedly submitted misleading documents in support of its claims for payment as well as its appeals of claim denials. One of the relators allegedly witnessed this practice and reported it to her supervisor.

Another aspect of this alleged Medicare fraud involved having physicians pre-sign blank certificates of medical necessity. After receiving the pre-signed certificate, GenomeDx allegedly filled in the patient’s name, date of birth and the date for the physician’s signature. According to the complaint, these templates were used to create fraudulent certificates of medical necessity because the physician never, in fact, approved the particular test for which a Medicare claim was submitted.

Other Questionable Practices

GenomeDx allegedly offered to reduce or waive coinsurance and deductibles payments to induce patients and physicians to order the Decipher test. The company failed to notify Medicare of this practice and allegedly continued to submit claims for the full cost of the tests. The complaint further alleged that after successfully obtaining test orders, GenomeDx failed to honor its offer of discounted or waived copays and billed patients for the full amount owed.

GenomeDx was also alleged to have paid physicians and pathology laboratories as an inducement to order tests. The complaint alleged at one instance where the company obtained a patient’s tissue sample directly from a pathology lab and performed a test on the sample without a physician’s order or the consent of the patient.

The Importance of Whistleblowers

This case vividly illustrates the important role that whistleblowers play in identifying and reporting fraud. The government lacks the resources to identify and prosecute every instance of fraud, and some scams continue for years without detection. Fraud against the government takes many forms, and employees are often in the best position to observe and report such activity.

In addition to providing protection from employer retaliation, the False Claims Act offers a monetary incentive to whistleblowers who provide original information. If the government makes a monetary recovery based on information provided, a whistleblower can receive between 15 and 30 percent of the recovery. In this case, the whistleblowers will receive approximately $350,000 of the total settlement proceeds of $1,990,380.

If you have information about fraud against the government, the experienced attorneys at McEldrew Young can assist you with all aspects of the whistleblower process, from investigating your claim and filing a complaint to successful recovery of a reward.