Exagen Inc. Agrees to Pay $653,143 to Resolve Allegations of Kickback Violations

BOSTON – A California-based life sciences company that makes diagnostic tests for the treatment of autoimmune conditions, Exagen Inc., has agreed to pay $653,143 to resolve allegations that it paid specimen processing fees to referring physicians to induce those physicians’ use of Exagen’s laboratory tests.

According to the settlement agreement, Exagen agreed to factual admissions that it paid certain referring physicians to complete blood draws for patients pursuant to specimen processing agreements that Exagen entered into with those physicians.  Exagen billed federal health care 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.  Exagen did so after becoming aware of a June 25, 2014 Special Fraud Alert from the Department of Health & Human Services’ Office of the Inspector General (HHS-OIG) that warned laboratories that the practice of paying referring physicians specimen processing fees could present a substantial risk of fraud and abuse.

The settlement stems from allegations originally brought in a lawsuit filed by a whistleblower under the qui tam provisions of the False Claims Act, which allows private parties, known as relators, to bring suit on behalf of the government and to share in any recovery.  In connection with today’s announced settlement, the relator will receive 16 percent of the recovery.

Acting United States Attorney Joshua S. Levy; HHS-OIG Special Agent in Charge Roberto Coviello; and Christopher F. Algieri, Special Agent in Charge of the Department of Veterans Affairs, Office of the Inspector General, Northeast Field Office made the announcement. Assistant U.S. Attorneys Abraham R. George, Chief of the Affirmative Civil Enforcement Unit, and Alexandra Brazier, also of the Affirmative Civil Enforcement Unit, handled the matter.