A whistleblower case against Caris Life Sciences Inc. may be dismissed based on legal technicalities without the court ever addressing the allegations made by the relators. In a motion to dismiss filed June 17, attorneys for Caris seek dismissal of all counts of the whistleblower’s April 16, 2013, complaint because the relators do not meet certain stringent requirements under the Federal Rules of Civil Procedures (in particular, rule 9(b) regarding pleading special matters). Because False Claims Act (FCA) liability attaches only to a specific claim actually presented to the government for payment, rule 9(b) requires that some example of reliability, such as a specific claim, must be provided in the complaint to support the allegation that an actual false claim was presented to the government. Caris’s attorneys argue that allegations made by the relators are conclusory and speculative and do not state how the conduct they allegedly witnessed resulted in filing false claims. The attorneys argue that the allegations are so broad and generalized that they do not meet the pleading requirements of rule 9(b). Regardless of the defendant attorney’s arguments, the allegations made by the whistleblowers include a long list of what appear to be serious matters concerning the quality of testing, FCA violations, billing fraud, and violations of the anti-kickback statute. The complaint includes a list of repeated violations alleged by the relators, including:
- Waving the technical component fees of its Target Now testing on Medicare beneficiaries;
- Promoting Target Now testing for uses that were not reasonable and necessary;
- Knowingly billing Medicare for hematology specimens that were not viable due to heat exposure;
- Offering kickbacks to providers to induce referral of Medicare patients;
- Unbundling and double billing to the Medicare program;
- Upcoding of certain procedures to obtain a higher level of reimbursement; and
- Retaliating against one of the relators for reporting the FCA violations.
Each item on the list is discussed in detail in the court documents. However, the defense attorney’s motion to dismiss concludes that while there is detail, there is no specific evidence to support that false claims were actually presented to the government for payment nor evidence to support that remunerations alleged are actually linked to any referrals. Allegations and Violations
A reading of the first amended complaint seems to refute the idea that the complaint does not contain specific examples of the allegations made by the whistleblowers. Whether or not the complaints are valid and what the consequences for Caris might be will only be revealed if the case goes forward beyond the dismissal. Until the final settlement, after all appeals are exhausted, no conclusion should be drawn from the current court documents. However, there are a number of issues in this case that could benefit all laboratories and certain other health care providers or suppliers if the case proceeds to the point where interpretation or comment by the court is an end result. Laboratories should put this case on their watch list because of the nature of the allegations, the potential impact on Caris, and the lessons that can be learned from the court’s final ruling. The Takeaway: Despite how a court rules on a whistleblower case lodged against Caris Life Science, labs should pay attention to the specific allegations related to false claims, waiver of fees, and kickbacks.