United States ex rel. Gipson v. Pathway Genomics Corporation – $4.1 Million Settlement

Case Description

Case Type: Whistleblower/Qui Tam
Company:  Pathway Genomics

WASHINGTON, December 30, 2015, Washington D.C. — Sanford Heisler Sharp, LLP today announced that genetic testing giant Pathway Genomics Corporation has agreed to settle a qui tam suit and pay the United States government, 28 states and the District of Columbia $4.1 million.

Sanford Heisler Sharp, along with Aashish Y. Desai of the Desai Law Firm, P.C., represented Relator Monique Gipson, who sued San Diego-based Pathway Genomics in the U.S. District Court for the Southern District of California under the whistleblower provisions of the federal False Claims Act, the federal Anti-Kickback Statute, and the relevant provisions of the false claims acts of the states and the District of Columbia pertaining to healthcare fraud. Gipson was a former sales representative at Pathway Genomics with first-hand knowledge of the company’s wrongdoing.

The whistleblower provisions of federal and state laws permit private citizens known as “relators” to bring lawsuits on behalf of the Government and receive a portion of the proceeds of any settlement or judgment.

David Sanford, Chairman of Sanford Heisler Sharp, LLP, said today’s settlement provides further affirmation of the key role whistleblowers play in ensuring transparency in government procurement at every level. “Relators like Monique Gipson are vital to the honest purchase of goods and services by government entities in healthcare and other important sectors,” Sanford said. “Every U.S. citizen owes Monique a debt of gratitude for ensuring their hard-earned tax dollars are not squandered on products or services that are tainted by illegal kickbacks and other fraudulent conduct.”

Pathway Genomics is one of many new healthcare technology companies that provide laboratory-based genetic screening tests for a variety of conditions including somatic and hereditary cancers, cardiac health, diet and weight loss, carrier screening, as well as for estimating drug response to medications used in managing pain and treating mental illnesses. The company marketed its tests to doctors whose patients were covered by Medicaid, Medicare, and other federal and state government-funded health programs, including the Department of Defense’s TRICARE insurance program, and the Veteran Health Administration.

According to the qui tam civil action filed by Gipson in April 2014, Pathway violated its contracts with the federal government, the states and the District of Columbia by offering physicians and medical groups a reimbursement program that induced and rewarded them for referring their patients to Pathway to receive genetic testing. Such reimbursements, inducements, and rewards explicitly violate the federal Anti-Kickback Statute and other applicable federal and state laws and regulations. Today’s settlement repays the government entities for services they had been fraudulently billed and paid as a result of the illicit kickbacks.

“Monique has helped the federal and state government recover millions of dollars in fraudulent payments to Pathway Genomics,” said Ross Brooks, Co-Chairman of Sanford Heisler Sharp’s national Whistleblower Practice. “As a result of the improper remuneration paid through this illegal kickback scheme, the company submitted hundreds of false and non-reimbursable claims for payments based on prohibited referrals to Medicaid, Medicare and other government programs. Monique has done a tremendous service to taxpayers by recognizing and promptly reporting Pathway’s illegal kickback scheme to federal and state officials.”

The states involved in today’s agreement included: California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Illinois, Indiana, Iowa, Louisiana, Maryland, Massachusetts, Michigan, Minnesota, Montana, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, Oklahoma, Rhode Island, Tennessee, Texas, Virginia, Washington, Wisconsin, as well as the District of Columbia.

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