On October 17, the United States’ Attorney’s Office for the District of Massachusetts announced a False Claims Act settlement with Exagen Inc., a life sciences company that makes diagnostic tests for the treatment of autoimmune conditions. Exagen agreed to pay $653,143 to settle allegations of a kickback scheme used to induce physicians to use Exagen’s laboratory tests.
According to the government, in 2014, the Department of Health & Human Services’ Office of the Inspector General issued a Special Fraud Alert that “warned laboratories that the practice of paying referring physicians specimen processing fees could present a substantial risk of fraud and abuse.”
The government further explains that Exagen admits that it “paid certain referring physicians to complete blood draws for patients pursuant to specimen processing agreements that Exagen entered into with those physicians” and that it “billed federal healthcare programs, including Medicare and other programs, for tests that it performed after receiving orders from the referring physicians to whom it paid the specimen processing fees.”
The allegations against Exagen were brought by a whistleblower under the qui tam provisions of the False Claims Act. Qui tam enables private citizens to file lawsuits on behalf of the government if they know of an individual or company defrauding the government. The whistleblower filed a qui tam suit, United States, et al., ex rel. Omni Healthcare, Inc. v. Exagen, Inc., in June 2021.
When qui tam suits result in a successful action against a fraudulent company or individual, qui tam whistleblowers are eligible to receive between 15 and 30% of the government’s recovery. In this case, the whistleblower is set to receive 16% of the recovery, or approximately $104,000.
On July 25, a bipartisan group of senators introduced the False Claims Amendments Act of 2023, which address a few technical loopholes undermining the success of the FCA. The bill is widely supported by whistleblower advocates.
“The False Claims Act is America’s number one fraud-fighting law,” said whistleblower attorney Stephen M. Kohn. “These amendments are urgently needed to ensure that whistleblowers can continue to play their key role in protecting taxpayers from corporate criminals.”