Pathway Genomics Denies Wrongdoing, Settles False Claims Allegations for $4 Million

By Kelly A. Briganti, Editorial Director, G2 Intelligence

As the year came to a close, the Federal Bureau of Investigation and the U.S. Attorney's Office announced December 30, 2015, a $4 million settlement with Pathway Genomics. The San Diego-based laboratory denied wrongdoing but agreed to pay that sum to resolve False Claims Act allegations relating to a physician reimbursement program the company has now voluntarily discontinued, according to the U.S. Attorney's Office announcement of the settlement. The government alleged the lab was paying physicians up to $20 for each patient saliva kit collected and referred to the lab for analysis, and then received government reimbursement for performing genetic tests on the samples.

"While genomic testing is a valuable and relatively recent medical tool, when specialized laboratories pay for referrals they aren't breaking any new ground but rather engaging in the same old kickback schemes," said Chris Schrank, Special Agent in Charge for the Office of Inspector General, U.S. Department of Health and Human Services Southern California Region, in the announcement. "Federal law enforcement will not let new technologies deter them from bringing violators to justice." The case originated from a whistleblower, or qui tam, lawsuit action brought by a former employee of Pathway Genomics, who will receive $686,225 as part of the settlement, according to the government.

Pathway Genomics denied wrongdoing in a statement, asserting that the settlement is "neither an admission of liability or wrongdoing by the Company, nor a concession by the United States that its claims are not well founded." The statement also notes that the government didn't require a corporate integrity agreement be executed, a common element of settlements that imposes compliance obligations, often requires annual reporting on compliance activities, and can last up to five years. "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," said the company's announcement. "We now consider this matter closed. By resolving this issue we can stay focused on our growing business and avoid the time and expense of a potentially lengthy litigation process."