Exact Sciences Subsidiary Genomic Health Settles Qi Tam Lawsuit for $32.5

The U.S. Department of Justice today announced that Genomic Health, Inc. (GHI), a leading provider of genomic-based clinical diagnostic tests, has agreed to pay $32.5 million to settle allegations that it violated the False Claims Act by engaging in a nationwide scheme to improperly bill Medicare for certain laboratory tests used in the diagnosis and treatment of cancer patients. GHI is a subsidiary of Exact Sciences Corporation, which acquired GHI in November 2019.

The allegations against GHI revolve around its principal test, Oncotype DX®, which is used for patients diagnosed with breast, colon, and prostate cancer. The United States asserted that GHI was involved in a scheme to circumvent Medicare’s 14-Day Rule, which governs the billing of genomic laboratory tests like Oncotype DX®. The 14-Day Rule stipulates that laboratories cannot separately bill Medicare for covered tests if a physician ordered the test within 14 days of a patient’s discharge from a hospital stay in an inpatient or outpatient setting. Tests ordered within this timeframe were covered under a lump-sum payment hospitals received from Medicare called the Diagnosis-Related Group (DRG) payment. For outpatient beneficiaries, the rule required tests ordered within 14 days of discharge to be billed to the hospital, which could then seek reimbursement from Medicare. Tests performed more than 14 days after discharge allowed laboratories to bill Medicare directly.

The United States alleged that GHI violated the 14-Day Rule in several ways:

1. Seeking direct reimbursement from Medicare for tests ordered within 14 days after an inpatient discharge, which should have been covered under the DRG payment to the hospital.
2. Seeking direct reimbursement for tests ordered within 14 days of a beneficiary’s outpatient procedure, which should have been billed to the hospital.
3. Encouraging providers to cancel and reorder tests after the 14-day timeframe had elapsed.
4. Failing to send timely invoices to hospitals for services that fell under the 14-Day Rule and instead writing off unpaid fees, thereby violating the Anti-Kickback Statute.

The settlement resolves allegations brought in two separate actions against GHI under the qui tam or whistleblower provisions of the False Claims Act. Under these provisions, private parties can file actions on behalf of the United States and receive a portion of any recovery. In this case, the relator’s share from the settlement will be $5,687,500. The qui tam cases are United States ex rel. Caughron v. Genomic Health, Inc., Civil Action No. 16-CV-4038 (EDNY) and United States ex rel. Doe v. Genomic Health, Inc., et al., Civil Action No. 17-CV-4460 (EDNY).