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GenomeDx Biosciences Corp. has agreed to pay $1.99 million to resolve allegations that it violated the False Claims Act, 31 U.S.C. §§ 3729 et seq., by submitting false claims to Medicare for its “Decipher®” post-operative genetic test for prostate cancer patients. GenomeDx is a genomic testing company with operations based in San Diego and headquarters in Vancouver, British Columbia.

The United States alleged that GenomeDx submitted claims to Medicare between September 2015 and June 2017 for the Decipher test that were not medically reasonable and necessary because the prostate cancer patients did not have risk factors necessitating the test, namely pathological stage T2 disease with a positive surgical margin, pathological stage T3 disease, or rising Prostate-Specific Antigen (“PSA”) levels after an initial PSA nadir.

“The Department of Justice is committed to ensuring that Medicare patients only receive laboratory testing that is reasonable and necessary for the individual patient,” said Assistant Attorney General Joseph A. Hunt.  “Medically unnecessary and unproven testing increases costs for federal health care programs and is not in the interest of patients.”

“As this settlement demonstrates, we are committed to protecting the integrity of the Medicare program and will hold health care providers accountable under the False Claims Act when they engage in improper billing,” said Robert S. Brewer, Jr., United States Attorney for the Southern District of California. “This settlement is also another example of our commitment to vigorously investigate cases brought to our attention by whistleblowers. We commend the two employees of GenomeDx who had the courage to come forward and work with investigators.”

“Lab tests and other medical services should only be conducted or provided when medically necessary,” said Christian J. Schrank, Special Agent in Charge for the Office of Inspector General of the U.S. Department of Health and Human Services.  “Whistleblowers play a critical role in keeping entities honest and accountable, and are encouraged to report suspected waste, fraud and abuse by those billing federal healthcare programs.”

“The message is clear, if you take advantage of programs like Medicare, you will be held accountable,” said John Brown, FBI Special Agent-in-Charge.  “Companies who engage in filing false claims to generate more corporate revenue are not only stealing from the federal taxpayer, but also from people who rely on federally funded programs for their health care needs.”

The False Claims Act allegations being resolved were originally brought in a lawsuit filed by two former employees of Genome DX, Stephanie LaFleur and Corrine Vause, under the qui tam, or whistleblower, provisions of the False Claims Act, which allow private citizens with knowledge of fraud against the government to bring suit on behalf of the government and to share in any recovery. The whistleblowers will receive approximately $350,000 of the settlement proceeds of $1,990,380.

The investigation was conducted by the Civil Division of the Department of Justice, the U.S. Attorney’s Office for the Southern District of California, the Department of Health and Human Services Office of Inspector General, and the Federal Bureau of Investigation.