Cooperating Cancer Testing Company Agrees to Pay Over $900,000 to Resolve Allegations of False Claims for Lab Tests

SAN FRANCISCO - Guardant Health, Inc., a precision oncology company based in Palo Alto, has agreed to settle allegations that it knowingly violated the False Claims Act (FCA), 31 U.S.C. §§ 3729-31, and regulations of the Defense Health Agency (DHA), announced United States Attorney Ismail J. Ramsey, U.S. Department of Health and Human Services Office of the Inspector General (HHS-OIG) Acting Special Agent in Charge Jeffrey McIntosh, and Department of Defense Office of Inspector General, Defense Criminal Investigative Service (DCIS), Western Field Office, Special Agent in Charge Bryan D. Denny. In connection with the settlement, the United States acknowledged that Guardant took a number of significant steps entitling it to credit for cooperating with the government, including voluntarily disclosing the conduct to HHS-OIG. Guardant will pay $913,932.93 to settle the FCA allegations and $31,082.00 in an administrative settlement with DHA.

As alleged by the government, in or around April 2021, a physician based in Austin, Texas contacted Guardant's Human Resources Department to recommend a close friend of the physician's family member for a position as an Account Manager in Guardant's Oncology Division. Guardant hired the family friend as an Account Manager. In October 2021, the physician contacted Guardant again, this time seeking a position for his step-daughter upon her graduation from college. The step-daughter was considered but rejected for a position in Guardant's Screening Division. However, in or around February 2022, two Guardant employees arranged for the family friend to be promoted, thereby creating an opening in the Oncology Division for employment of the step-daughter. These employees knew of the relationship between the step-daughter and the physician, and that the step-daughter was not qualified for the role. The physician then ordered significantly more Guardant tests per quarter after both hirings.

Based on this conduct, the United States alleges that Guardant submitted claims to and received payments from Medicare for clinical laboratory services that had been referred to Guardant by the physician in violation of the Physician Self-Referral Law, or Stark Law, 42 U.S.C. § 1395nn. The United States further alleges that Guardant knowingly submitted or caused the submission of false claims for payment for Guardant tests ordered by the physician during the relevant time period to Medicare Part B in violation of the FCA and to TRICARE in violation of 32 C.F.R. § 199.9.

Guardant cooperated with the government's investigation of the issues and took prompt and substantial remedial measures. Shortly after receiving information regarding the physician's referrals, Guardant stopped billing federal health care programs for Guardant tests ordered by the physician. Guardant also terminated the physician's family member's employment.

"This Office is committed to holding accountable individuals and entities who commit and profit from healthcare fraud," said United States Attorney for the Northern District of California Ismail J. Ramsey. "We will continue to pursue those who enter into unlawful arrangements that waste taxpayer dollars and corrupt the integrity of healthcare decisionmaking."

"Illegal referrals and incentives undermine the integrity of our federal healthcare programs," said Acting Special Agent in Charge Jeffrey McIntosh of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG). "HHS-OIG and our law enforcement partners remain committed to identifying and holding accountable those who engage in such unlawful relationships."

"The announced settlement demonstrates the government's commitment to hold accountable those whose actions taint the integrity of federal healthcare programs, including the Department of Defense's TRICARE program," said Special Agent in Charge Denny. "DCIS remains steadfastly committed to working with our law enforcement partners to investigate questionable actions that harm the quality of the TRICARE program and the services it provides to our military members and their families."

Assistant U.S. Attorneys Sharanya Mohan and Ekta Dharia handled this matter for the government, with assistance from Jonathan Birch. The investigation and settlement resulted from a coordinated effort by the U.S. Attorney's Office for the Northern District of California, HHS-OIG, and DOD-OIG. Mr. Ramsey thanked HHS-OIG, DOD-OIG, and HHS's Office of General Counsel for their assistance with this matter.

The claims resolved by the settlement are allegations only, and there has been no determination of liability.