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Genomic Health to Pay $32.5M to Resolve Cancer Test False Claims Allegations by DOJ

This story has been updated from a previous version to include a statement from Genomic Health parent company Exact Sciences.

NEW YORK – Cancer test maker Genomic Health, now a wholly owned subsidiary of Exact Sciences, has agreed to pay $32.5 million to resolve allegations that it violated the False Claims Act by engaging in a nationwide scheme to improperly bill Medicare for certain laboratory tests used to diagnose and treat cancer patients.

The US Department of Justice said in a statement announcing the settlement on Monday that Genomic Health allegedly perpetrated a scheme to evade Medicare's 14-Day Rule, which governs the billing of genomic laboratory tests like its flagship breast cancer risk assay Oncotype DX. The company was under investigation for these evasions as early as 2018, prior to its acquisition by Exact Sciences.

"We are pleased to resolve this matter related to legacy policies at Genomic Health prior to its 2019 acquisition by Exact Sciences," a company spokesperson wrote in an email. "We are committed to ethical and lawful business practices, including our partnership with government healthcare programs, which are intended to provide vulnerable patients with access to invaluable cancer diagnostic tests. Exact Sciences has a long history of compliance and a record of enhancing the compliance practices of the companies that we acquire."

The 14-Day Rule prohibited laboratories from separately billing Medicare for covered tests if a physician ordered the test within 14 days of the patient’s discharge from a hospital stay in an inpatient or outpatient setting. For inpatient beneficiaries, such tests were covered under a lump-sum payment hospitals receive. For outpatient beneficiaries, the rule required any tests ordered within 14 days of the patient’s discharge to be billed to the hospital, which could then bill Medicare.

According to the DOJ, Genomic Health allegedly conspired with and encouraged hospitals and physicians to cancel and reorder Oncotype DX tests after the 14-day period and/or failed to discourage providers from doing so. As a result, it received direct payment for tests that should have been covered as part of hospitals' lump sum reimbursement.

The company was also alleged to have failed to send timely invoices to hospitals for laboratory services that fell under the 14-Day Rule and instead wrote off the unpaid fees for laboratory services, thereby violating the Anti-Kickback Statute.

The claims resolved by the settlement are allegations only and there has been no determination of liability, the DOJ said.

"This settlement rightly requires the payment of double damages caused by delayed tests for cancer patients for no reason other than to circumvent a Medicare requirement and allow improper payment to GHI," US Attorney Breon Peace for the Eastern District of New York said in a statement.

The DOJ added that the settlement includes the resolution of allegations brought in two separate actions filed against Genomic Health under the qui tam or whistleblower provisions of the False Claims Act, which allow private parties to file an action on behalf of the US and receive a portion of any recovery. According to the DOJ, the whistleblowers' share from the proceeds of the newly announced settlement will be $5.7 million.