A whistleblower suit that alleges Caris Life Sciences submitted false claims to Medicare, paid kickbacks to referring physicians and hospitals, and retaliated against an employee for reporting the alleged false claims emerged almost intact after a motion by the defendants to dismiss the suit. In an Oct. 23 ruling by the U.S. District Court for the Northern District of Texas, Judge Jorge A. Solis denied the majority of the motion for dismissal by defendant Caris, granting only the argument that the relators failed to plead specific facts demonstrating that payment of travel fees and honoraria to physicians attending Caris-sponsored meetings actually induced any Medicare claims to be submitted. Caris Life Sciences Inc., Caris Diagnostics Inc., and Miraca Life Sciences Inc. (Caris) filed a motion to dismiss a whistleblower lawsuit brought by former employees of Caris based on the argument that the plaintiffs failed to state a specific claim for which relief can be granted as defined in the Federal Rule of Civil Procedure 9(b). The lawsuit was brought by Marsha Fontanive, a former sales representative, and Lindsey Vitez, who had worked in the billing department. There have been several recent cases that have used this rule as an argument to get false claims lawsuits dismissed, if not entirely, at least partially. The ruling allows the False Claims Act (FCA) case to go forward, exposing Caris to a variety of allegations and potentially significant fines and punishments if it loses in the end. The case is important to those laboratories and life science companies that perform similar testing and use similar marketing strategies and techniques, such as those used by pharmaceutical companies, to increase referrals for their products. It is also important to laboratories performing and billing for laboratory-developed and genetic tests that are considered somewhat controversial by some experts concerning their efficacy and use in diagnosing or treating patients. In today’s laboratory marketplace, these laboratories include many small, specialty laboratories that perform genetic and molecular-based tests. One of the dangers of a case like this is the exposure to public scrutiny concerning the way these laboratories bill for and market their tests and how well established and documented is the claimed clinical use for these tests. Other whistleblowers that follow the case may note similar activities by their employers and may believe they can make a similar case against their employing lab. The Allegations In the amended complaint filed on April 16, the relators (plaintiffs) alleged distinct FCA violations involving billing for the test known as “Target Now,” FCA allegations involving the anti-kickback statutes (AKS), and violations of the FCA whistleblower provisions. Target Now is a test offered by Caris’s oncology department to identify optimal cancer treatments. Regarding the billing allegations, the relators claim that Caris billed for technical component services that did not qualify, services that were not reasonable and necessary, unbundling, double billing, overbilling certain pathology and cytogenetics services, and billing for undocumented services. The specific requirements of this kind of billing are often unique and involve rules that can be different than the rules applicable to many common laboratory tests. This can lead employees to believe that something improper is going on when, in fact, there is nothing untoward going on at all. However, in this case, according to the complaint filed, the relators apparently have provided a fairly substantial amount of records and documentation to lead Solis to allow the case to proceed. One particular allegation was that Caris billed for hematology tests that were compromised because the samples were exposed to excessive heat during transport to the laboratory. According to the complaint, Caris knew the samples were compromised but performed and reported the tests anyway and then billed Medicare for them. In another allegation, the relators assert that Caris filed false claims because it billed for Target Now tests on first-line surgical specimens even though it had no documentation or evidence to support the efficacy or benefit to patients. Other allegations include that Caris employees changed the date of service on some claims and added diagnosis codes taken from Medicare coverage policies to avoid denials. According to the ruling, Solis denied Caris’s argument that the plaintiffs had not provided sufficient detail to support that claims were submitted and allowed the case to go forward. The claims of wrongdoing as described in the complaint are in great enough detail and provide names and dates of actions purportedly witnessed directly by the relators that Solis repeatedly denied Caris’s arguments that the claims did not contain sufficient particularity and should be dismissed. AKS Violations The claims involving allegations of AKS violations are based on two activities. The first is the waiver of technical component (TC) bills to hospitals that did not qualify for any exception under Medicare billing rules that would permit Caris to bill directly to Medicare. In this case, Caris was supposed to bill the hospital for the TC. However, in meetings with sales representatives, Caris purportedly feared that hospitals who were billed for the TCs would stop referring Target Now tests to Caris. Caris allegedly held these bills while it tried to qualify the hospitals, unsuccessfully, so it could file the claims directly to Medicare. Meanwhile, Caris continued to bill for the professional components of these tests. The second AKS allegation concerned alleged illegal kickbacks to physicians who attended Caris meetings disguised as travel expenses and honoraria. Ultimately, Solis granted a dismissal for this particular allegation, the only one granted. Retaliation Against Whistleblower Vitez claimed she was retaliated against, and subsequently resigned as a result of the retaliation, for bringing the alleged improper coding and billing practices to light. She claimed that after she refused to alter reports and conceal errors she was removed from her position of identifying underbilling and internal coding errors and suffered various forms of retaliation that she reported directly and anonymously to her superiors. Caris asserted that the claim should be dismissed because it did not know that Vitez was involved in protected conduct but, once again, Solis refused to grant the dismissal. The Potential Danger to Encourage Other Whistleblowers While the details of the allegations in this complaint are specific to this case, many of the issues related to the allegations are similar in many respects to perfectly legal activities surrounding the billing and marketing practices of laboratories engaged in the same kind of testing. These can easily be misconstrued by an employee who is not familiar with the rules and regulations involved and may result in whistleblower lawsuits. With the number of whistleblower cases on the rise and the size of some of the rewards relators have received, laboratories have to be careful to take steps to prevent employees from becoming whistleblowers. Some things that can be done include making sure lines of communication are open, all allegations are taken seriously and properly investigated, employees who report potential problems are treated with respect and informed of the outcome of any investigation or review, and that supervisors are properly trained in what they can and cannot do to a person who may be a whistleblower and is still employed by the laboratory. Takeaway: Publicly disclosed court cases and rulings can easily be misconstrued by employees and make them suspicious of a laboratory’s billing and marketing practices. Laboratories should have active whistleblower prevention policies and practices.