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Class Action Suits Against Myriad Allege Failure to Disclose Medicare Billing Practices to Investors

NEW YORK (GenomeWeb) – Two law firms have filed class action lawsuits against Myriad Genetics on behalf of investors, alleging that the molecular diagnostic firm failed to accurately disclose how it billed Medicare and Medicaid for its myRisk Hereditary Cancer test.

Pomerantz LLP filed a class action lawsuit on behalf of investors who purchased or acquired common shares in Myriad between Aug. 13, 2014 and March 12, 2018. The complaint alleges that during this time, the company made false and misleading statements about its business, operational, and compliance policies. Specifically, Pomerantz is accusing Myriad of misleading investors or failing to disclose that it was submitting improper claims for payment under Medicare and Medicaid for hereditary cancer testing; that this conduct could subject the firm to greater regulatory scrutiny and enforcement action; that revenues garnered for hereditary cancer testing were the result of improper conduct and not sustainable; and that Myriad's public statements on these matters were false.  

Rosen Law firm also announced a class action lawsuit on behalf of purchasers of securities in Myriad while making the same allegations, though no class has yet been certified in that suit.

"We are aware of a shareholder lawsuit that was filed in the US District Court in Utah," Myriad spokesperson Ron Rogers said in an email to GenomeWeb. "We believe the claims are without merit, and the company intends to vigorously defend itself in this matter."

The lawsuits follow Myriad's announcement on March 12 that it received a subpoena from the US Department of Health and Human Services' Office of Inspector General related to "an investigation into possible false or otherwise improper claims submitted for payment under Medicare and Medicaid." The subpoena covers a period starting Jan. 1, 2014 through March 12, 2018 and involves the firm's billing practices related to its myRisk test.

The test was launched in September 2013 as a 25-gene panel, but now gauges 28 genes associated with risk for eight hereditary cancers. The panel always included analysis of BRCA1 and BRCA2.

The class action lawsuits suggest that the OIG's actions against Myriad have raised questions about the extent to which Myriad had used CPT codes 81211 and 81213 — describing full sequencing analysis of BRCA1/2 and duplication and deletion analysis of the genes — to garner Medicare payment for the myRisk panel.

CMS had issued coding edits to block labs from frequently stacking these codes, which together amount to around $2,900 in payments. It seems CMS has guided companies to instead use CPT code 81162 (describing comprehensive analysis of BRCA1/2), and only bill CPT codes 81211 and 81213 with the use of a modifier to indicate that separate services have been performed on different days. Under the Protecting Access to Medicare Act, the price for CPT Code 81162 is $2,253 in 2018, and would be reduced to $2,018 in 2019 and to $1,825 in 2020.

"When the true details entered the market, the lawsuit claims that investors suffered damages," according to a statement from Rosen Law firm. Following Myriad's announcement of the subpoena, the company's stock price fell more than 12 percent and closed at $29.01 on March 13, Pomerantz noted.

At a meeting sponsored by financial services firm Cowen, Myriad CEO Mark Capone said that 7 percent of its revenue for hereditary cancer testing comes from Medicare, and provided more details around the company's Medicare billing practices. He explained that when it comes to commercial payors, pricing and coding are agreed upon in advance as part of contracts.

However, Capone said that Medicare is different in that physicians typically order an integrated BRACAnalysis test which assesses the BRCA1 and BRCA2 genes associated breast and ovarian cancer and then they turn to myRisk for analysis of the additional 26 genes associated with eight hereditary cancers. The integrated BRACAnalysis test is performed at two different labs, one that does Sanger sequencing and another that gauges large rearrangements. The BRCA test results are then billed using CPT Code 81162.

It is unclear how this explanation squares with Myriad's publicly outlined strategy of moving its hereditary cancer testing to the myRisk panel (which includes analysis of BRCA1/2 in addition to other genes) by mid-2015 and transitioning BRACAnalysis into a companion diagnostic.

In a Form 10-K filed with the SEC, Myriad has stated that the penalties for violating the federal False Claims Act could include payment of up to three times the damages sustained by the government, civil penalties ranging from $5,500 to $11,000 for each false claim, and exclusion from the federal health care programs.