Security News: Caris Life Sciences Pays over $2.8 Million to Settle False Claims Act Allegations from Delay in Submission of Genetic Cancer Screening Tests

Caris Life Sciences, Inc. (Caris) has agreed to pay $2,886,674.86 to resolve allegations that it violated the False Claims Act in an alleged nationwide scheme to improperly bill Medicare for laboratory tests known as “Caris Molecular Intelligence” and the “ADAPT Biotargeting System.” 

Breon Peace, United States Attorney for the Eastern District of New York, Scott J. Lampert, Special Agent-in-Charge, U.S. Department of Health and Human Services, Office of the Inspector General, New York Region (HHS-OIG) and Michael J. Driscoll, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI) announced the settlement.

“In this case, tests for cancer patients were delayed for no reason other than to circumvent a Medicare requirement and allow improper payment to Caris,” stated United States Attorney Peace.  “We will continue to enforce Medicare rules to protect the program and its vital role in our health care system, especially for the elderly and vulnerable.” 

Mr. Peace expressed his gratitude for the support of the United States Department of Health and Human Services for their assistance in investigating these important claims.

“This settlement is another example of our commitment to holding the health care industry accountable for proper billing practices,” stated HHS-OIG Special Agent-in-Charge Lampert.  “Along with our law enforcement partners, HHS-OIG will continue to ensure that individuals and entities billing federal health care programs do so in an honest manner.”

“Caris Life Sciences intentionally deceived the public health care system to benefit from unlawful payments. Medicare fraud, in all its many forms, puts public health at risk and hands taxpayers the bill. We will continue to work with our partners to ensure programs like Medicare remain free from fraudulent activity,” stated Assistant Director-in-Charge Driscoll.  

Caris, a molecular science company headquartered in Texas, developed a series of laboratory tests primarily for cancer patients to detect the activity of certain genes within a breast cancer tumor to predict the risk of breast cancer recurrence in patients.  These predictive genetic marker tests are used by oncologists and other physicians to assist in determining appropriate treatment options for cancer patients.

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 stay either in an outpatient or inpatient setting.  However, if the test was performed more than 14 days after discharge, then Medicare’s 14-Day Rule permitted laboratories to bill Medicare directly for the test.

The United States contends that Caris perpetrated a scheme to evade Medicare regulations when submitting claims to the Centers for Medicare & Medicaid Services (CMS) for its predictive marker tests to circumvent Medicare’s 14-Day Rule (which establishes who may bill Medicare for certain laboratory services) in three ways:             

• Caris sought direct reimbursement from CMS for claims on behalf of Medicare beneficiaries, when tests were ordered and submitted for testing within 14 days after an inpatient discharge.  For inpatient beneficiaries, hospitals receive a lump-sum payment CMS called the Diagnosis-Related Group (“DRG”) payment.  By submitting separate claims for the laboratory tests, Medicare paid twice for the same service, as part of the DRG and in a direct payment to Caris.
• Caris sought direct reimbursement from CMS for claims on behalf of Medicare beneficiaries, when Caris failed to discourage providers who ordered testing within 14 days after an inpatient or outpatient discharge from canceling the order and placing a new order for testing after the 14-day time period had elapsed; and
• Caris sought direct reimbursement from CMS for tests ordered within 14 days of a beneficiary’s out-patient procedure.

The civil settlement includes the partial resolution of one action and final resolution of another brought under the qui tam or whistleblower provisions of the False Claims Act against Caris.  Under the qui tam provisions of the False Claims Act, a private party can file an action on behalf of the United States and receive a portion of the settlement if the government takes over the case and reaches a monetary agreement with the defendant.  The qui tam cases are captioned United States ex rel. Doe v. (UNDER SEAL) and United States ex rel. Caughron v. CDx Holdings, Inc. f/k/a Caris Life Science, Civil Action No. 18-CV-0352 (E.D.N.Y). 

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

The government’s case was handled by Senior Litigation Counsel Deborah B. Zwany with assistance from Affirmative Civil Enforcement Auditor Michael Gambrell. The Office of Inspector General at the Department of Health and Human Services and the Federal Bureau of Investigation assisted in the investigation of these cases.