Posted January 4th, 2016.
By Dani Kass
Law360, New York (January 4, 2016, 2:18 PM ET) — Genetic testing company Pathway Genomics Corp. has agreed to pay $4.1 million to the federal government, 28 states and Washington, D.C., to settle a former employee’s False Claims Act suit accusing it of running a kickback scheme, counsel for the whistleblower said.
Monique Gipson, a former Pathway sales representative who filed the suit in April 2014, accused the company of providing special reimbursement to physicians and medical groups that referred patients to it, in violation of the False Claims Act, Anti-Kickback Statute and other federal and state laws, according to Sanford Heisler Kimpel LLP. Pathway did not admit liability as part of the settlement announced on Dec. 30.
“Monique has helped the federal and state government recover millions of dollars in fraudulent payments to Pathway Genomics,” Ross Brooks, co-chairman of the firm’s whistleblower practice said in a statement. “As a result of the improper remuneration paid through this illegal kickback scheme, the company submitted hundreds of false and nonreimbursable 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.”
On Dec. 24, the government said that it would be intervening.
Pathway would market its tests to doctors with patients who were Medicare and Medicaid beneficiaries, along with those covered by other government programs, such as the U.S. Department of Defense‘s Tricare plan and the Veterans Health Administration, Sanford Heisler Kimpel said.
The testing company said that it cooperated fully with the government’s inquiry and will not have to enter a corporate integrity agreement as part of the settlement. It settled to avoid lengthy litigation, it said.
“Although Pathway may debate some of the merits of the DOJ’s allegations, we recognize and respect the government’s responsibility to regulate industry practices,” Pathway said in a statement. “We continue to offer our full array of advanced genetic tests that empowers physicians and patients with accurate and actionable information that allows them to live better and healthier lives.”
Pathway provides genetic testing for conditions including somatic and hereditary cancers, carrier screening, cardiac health and diet and weight loss and drug response for medications, including those used to manage pain and mental health.
The settlement will be spread between the federal government, Gipson, 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, Washington, D.C., and Wisconsin.
The federal government is represented by Douglas Keehn and Joseph Patrick Price Jr. of the U.S. Attorney’s Office for the Southern District of California.
Gipson is represented by Ross Brooks, David Sanford and Grant Morris of Sanford Heisler Kimpel LLP, and Aashish Y. Desai of the Desai Law Firm PC.
Pathway is represented by a Procopio Cory Hargreaves & Savitch LLP team led by Robert Marasco.
The case is ex rel Gipson et al v. Pathway Genomics Corporation, case number 3:14-cv-01919, in the U.S. District Court for the Southern District of California.
–Editing by Stephen Berg.