Genomic Health Pays $32.5M to settle False Claims Act Medicare Billing Lawsuit

Genomic Health Inc., a clinical diagnostic test supplier, will pay $32.5 million to settle two whistleblowers’ lawsuits filed by Phillips & Cohen LLP and Brown LLC.  The lawsuits allege Genomic Health violated the False Claims Act by overbilling the federal government for genomic-based lab tests for cancer patients.

According to the complaints, California-based Genomic Health conspired with hospitals and doctors to cancel or delay orders so the company could charge Medicare for tests that should have been billed to the hospital or that were already covered by lump-sum payments hospitals receive from the federal government.

“When medical test results are delayed, patient’s health is at risk,” said Erika Kelton, partner and whistleblower attorney at Phillips & Cohen. “This settlement recognizes the importance of whistleblowers in bringing wrongdoing to light.”

The allegations spanned more than a decade, from January 2008 through February 2020, and involved Genomic Health using a series of workarounds to evade Medicare’s “date of service” rule, which prohibits laboratories from separately billing the health insurance program for tests if a doctor ordered a test within 14 days of the patient’s discharge or outpatient procedure.

Genomic Health allegedly submitted separate claims for tests ordered within the two-week window following inpatient discharges or outpatient procedures.  This caused the company to receive payments for tests that should have been covered by Medicare’s lump-sum payment to hospitals.

The government and whistleblowers allege Genomic Health encouraged hospitals and doctors to cancel and reorder certain tests so the orders would be processed after the 14-day window had elapsed. The company is also accused of violating the Anti-Kickback Statute.

“Medicare rules are intended to keep medical costs down,” said John Tremblay, partner and whistleblower attorney with Phillips & Cohen.  “This is a classic case of putting profits ahead of patients’ health.”

Genomic Health was acquired by Wisconsin-based Exact Sciences Corp., another laboratory firm specializing in cancer detection in 2019, according to the settlement.

The lawsuits were filed under the whistleblower provisions of the False Claims Act, which allow private citizens to file “qui tam” lawsuits against companies that defraud the government and recover funds on the government’s behalf. Whistleblowers are provided protection against job retaliation under the False Claims Act and given rewards that range from 15% to 25% of the recovery when the government joins the case.

Phillips & Cohen is the most successful law firm representing whistleblowers, with recoveries from cases totaling over $12.8 billion and 17 awards for clients under Dodd-Frank whistleblower reward programs. The firm includes the former first head of the SEC Office of the Whistleblower, the former director of the CFTC’s Whistleblower Office, a former deputy administrator of the Centers for Medicare and Medicaid Services, the author of a leading treatise on the False Claims Act, and numerous attorneys with decades of experience representing whistleblowers.

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