Guardant Health, Inc., a precision oncology company in California, reached a settlement with the United States Department of Justice (DOJ) to resolve allegations that it knowingly violated the False Claims Act and regulations of the Defense Health Agency (DHA). Guardant will pay $913,932.93 to settle the False Claims Act allegations and an additional $31,082 in an administrative settlement with the DHA.
The government alleged that an Austin, Texas physician contacted Guardant’s Human Resources Department in or around April 2021 to recommend a close friend’s family member for an Account Manager in Guardant’s Oncology Division. Guardant subsequently hired the family friend as an Account Manager. Then, in October 2021, the physician again reached out to Guardant, recommending they hire his stepdaughter upon her college graduation. In making contact with Guardant, the physician noted that he was “excited to work” with Guardant while “potentially promoting [the stepdaughter’s] career at the same time.” The stepdaughter was considered for a position within the Screening Division but did not receive the job due to her lack of experience.
In or around February 2022, two Guardant employees arranged for the family friend of the physician who was hired to be promoted, creating an opening in the Oncology Division. The two employees involved arranged the promotion with the intent to hire the stepdaughter, despite knowing that she was not qualified for the role. In March 2022, Guardant offered the stepdaughter the role of Account Manager within the Oncology Division and she accepted. In her role, she was responsible for the account of her stepfather.
The DOJ alleged that the physician in question ordered significantly more Guardant tests per quarter after each of the hiring events. In the settlement document, it was noted that prior to the April 2021 hiring of the family friend, the physician ordered very few Guardant tests but from April 2021 to March 2022, the physician ordered about 50 Guardant tests per quarter. Once the stepdaughter was hired in March 2022, the physician ordered drastically more Guardant tests – between 124 and 398 tests per quarter.
Therefore, the United States alleges that Guardant submitted claims to – and received payments from – Medicare for clinical laboratory services that were referred to Guardant by the physician in violation of the Stark Law. The United States further alleged that Guardant knowingly submitted or caused the submission of false claims for payment for Guardant tests ordered by the physician to Medicare and TRICARE.
Because Guardant cooperated with the government’s investigation and took prompt (and substantial) remedial measures, they received credit for cooperating with the government and a reduced settlement amount. In addition to cooperating, Guardant self-disclosed the potential Stark Law violation. After learning of the potential violations, Guardant launched an internal investigation and started taking remedial action. Part of the remedial actions included stopping billing federal health care programs for Guardant tests that were ordered by the physician as well as terminating the employment of the physician’s stepdaughter.