Friday, July 19, 2019

Myriad Settles OIG Investigation for $9M

On July 19, 2018, it was reported that Myriad entered an OIG settlement for $9.1M.   Myriad remarked it felt the charges were incorrect, but that the settlement would avoid a protracted litigation.
  • The issue was initially reported in March 2018.  Here.
  • Genomeweb today, July 19, here.
  • Genomeweb updated, July 22, here.
  • Lexology article by attorney Scott Gallisdorfer, August 27, here.
  • Myriad brief filing at SEC, here.
  • Myriad stock chart, here.
  • Myriad payments by code, online at CMS, 2014-2017 multi-tab Excel in cloud here.
Myriad's stock popped from about $27 to about $29, about 7%, reflecting a market cap bump of about $140M (current market cap circa $2B.)   This suggests that consensus expectations during the period of uncertainty were more negative than the actual resolution was.

While Myriad's SEC filing is very brief (7 sentences, 138 words), a few notes.
  • The case was a qui tam case (e.g. filed by an individual with knowledge of Myriad billing on behalf of the government.)
  • Qui tam filing started in October 2017.
  • This led to an OIG subpoena, in February 2018.
  • It's about Medicare billing for hereditary cancer (not e.g. about Assurex or Prolaris.)
  • Company believes key allegations were false.
  • DOJ declined to intervene in the case.
  • Settled for $9.1M.
    • (In qui tam cases where it is stated publicly, I have seen statements that whistleblowers may net up to 10-20%. In this case it's not stated.)
    • ($9.1M would otherwise have bought 18,000 law firm hours at $500/hr).
    • (A settlement is largely closed-doors, courtroom litigation far more public.)
  • Filed in District of South Carolina (not Utah where Myriad is located or North Dakota where Noridian processes its Medicare claims).
    • (Some screen shots from the District of SC settlement 3:17-cv-02945-JFA at bottom).

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Screen Shots USDC SC 3:17-cv-029145-JFA (or here).

Online documents include, among others, Dr. Jeter's original 24-page complaint about coding choices 10/31/2017.

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Did CMS Have Another Route to Effectuate Its Concerns?

Having worked in CMS Part B, it seems there was another route called sampling and extrapolated recoupment.  MAC could have sampled 50 claims from Myriad, randomly from one year of claims, found an error rate (say, each paid $2000 instead of $1000), and extrapolated that error rate in a recoupment across the year of claims.  This is a routine internal maneuver by the MAC and quite rapid.  (It leads into the routine appeals channels upwards towards an ALJ). 

It's unclear why this administrative packet of rules wasn't applied, given the level of speed and control a MAC would have had, and given the stated concerns of Dr Jeter in her court documents.

CMS Requires MACs to Refer "Fraud" to Authorities

When MAC staff find evidence of potential fraud, the staff shall refer to a Zone Integrity Program Contracting (ZPIC) (see Program Integrity manual, 3.6, here.)  This is the only instruction to MAC staff, there is no additional instruction recommending that the MAC staff stop and file a qui tam suit for themselves.  Dr. Jeter's 24-page case uses the term "fraud/fraudulent/defraud" 14 times.



Myriad's stock popped from $27 to $29 on Friday, but settled back near $27 on Monday afternoon.

See also Kessman case re billing Medicare; 81432; here.  Article on Myriad billing, FOIA, the SIRF foundation; here