California Genetic Testing Company Agrees To Pay $8.25 Million To Resolve False Claims Allegations; Paducah, Ky, Area Hospital Also Settles

LOUISVILLE, Ky. – United States Attorney Russell Coleman today announced an $8.25 million settlement with Agendia, Inc., a molecular diagnostics testing company based in Irvine, California, for an alleged nationwide scheme to bill Medicare for Agendia’s flagship genetic test, MammaPrint. The MammaPrint test analyzes the activity of certain genes within a breast cancer tumor to predict the risk of breast cancer recurrence in patients.

“When all the legal jargon is stripped away, this was about delaying the submission of breast cancer screening tests at the expense of our vitally important Medicare program,” said U.S. Attorney Russell Coleman. “From our largest urban hospitals to medical facilities in the Purchase Region, this conduct will not be tolerated in the Western District of Kentucky.” 

The allegations resolved by this settlement were first brought in a lawsuit filed by former employee of Lourdes Hospital, located in Paducah, Kentucky, under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private parties to sue on behalf of the government for false claims and to receive a share of any recovery. The qui tam case is captioned United States ex rel. Flick v. Agendia, Inc. and Mercy Health Partners – Lourdes, Inc. (3:15-cv-050-JRW). The United States intervened in the Civil Action for purposes of settlement in May 2020.

The United States contends that Agendia conspired with hospitals to artificially delay ordering the MammaPrint genetic assay in order to circumvent Medicare’s 14-Day Rule (which establishes who may bill Medicare for certain lab service). During the time period covered by the settlement, Medicare’s 14-Day Rule prohibited laboratories from separately billing Medicare for tests performed on specimens if a physician ordered the test within 14 days of the patient’s discharge from a hospital, regardless as to whether the patient was in an outpatient or inpatient setting. However, if the test was performed 14 days after discharge, then Medicare’s 14-Day Rule permitted laboratories to bill Medicare directly for the test.

The United States alleges Agendia engaged in a nationwide scheme to circumvent Medicare’s 14-Day Rule so that it could inappropriately bill Medicare directly for its MammaPrint tests that were ordered within 14 days. The United States contends that Agendia perpetrated this scheme in one of two ways:

• One way involved Agendia frequently refusing to perform MammaPrint tests if a Medicare patient had been discharged less than 14 days earlier. Agendia would cancel the order and then ask a physician to resubmit the order after the 14-day period had lapsed.

• A second way used what Agendia employees coined a “Medicare hold” system, whereby Agendia automatically held orders for Medicare patients at the time they were received, refusing to test the specimens until 14 days after the patient’s discharge. For orders placed in this “Medicare hold,” Agendia personnel set calendar reminders for the fourteenth day after the patient had been discharged. Agendia personnel then contacted the doctor who had ordered testing, and asked the doctor to “confirm” the order. Agendia then used the “confirmed” date for purposes of billing Medicare instead of the date the test was originally ordered.  

In a separate settlement, the United States contended that Mercy Health – Lourdes Hospital in Paducah, Kentucky, worked in concert with Agendia to circumvent the date of service rules. Following breast biopsy procedures, Lourdes Hospital held tissue specimens for 14 days or longer after patients were discharged before sending them to Agendia for testing. Despite knowing the specimen should be immediately sent to Agendia, Lourdes held the test orders for 14 days or longer in order to allow Agendia to separately bill Medicare for the test. This also meant that Lourdes avoided paying Agendia for the testing. In 2017, Lourdes Hospital paid the United States $211,039.28 to settle these false claims allegations.

The matter was handled by Assistant United States Attorneys Hannah C. Choate and Benjamin S. Schecter. The investigation was conducted by the Office of Inspector General Health and Human Services.

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