Dive Brief:

• Guardant Health will pay almost $914,000 to settle allegations that it violated the False Claims Act without admitting liability.
• The settlement agreement with the U.S. Attorney's Office for the Northern District of California resolves allegations that an oncologist ordered significantly more Guardant tests after the company hired a family friend and his stepdaughter.
• Guardant voluntarily disclosed the conduct to the government, stopped billing federal healthcare programs for tests ordered by the physician and terminated the stepdaughter’s employment. The U.S. Attorney said the actions entitled Guardant to credit for cooperating.

Dive Insight:

The origins of the case date back to around April 2021, when an oncologist based in Texas contacted Guardant’s human resources department to recommend a close friend of a family member for the role of account manager in the company’s oncology division. Guardant hired the family friend and assigned the individual to the South Texas region responsible for the oncologist’s account.

In October 2021, the physician contacted Guardant to seek a position for his stepdaughter upon her graduation from college. The oncologist said he was “excited to work” with Guardant while “potentially promoting [the family member’s] career at the same time,” according to the settlement agreement.

Guardant considered the stepdaughter for a position in its screening division but rejected the application because of her lack of experience and the absence of an open position in the oncology unit. However, two Guardant employees arranged for the family friend to be promoted to account executive in February 2022, according to the agreement, creating an opening for the stepdaughter.

“These employees knew of the relationship between the family member and the physician, and that the family member was not qualified for the role,” the Attorney's Office said. The stepdaughter joined the company in March 2022 and was responsible for the account of her stepfather, the oncologist.

Before April 2021, the physician “ordered de minimis Guardant tests,” a legal term meaning too small to be meaningful. Having ordered a trivial amount of tests before Guardant employed his family friend, the physician ordered around 50 tests a quarter from April 2021 to March 2022. The physician ordered between 124 and 398 tests per quarter after Guardant began employing his stepdaughter. 

“As a direct result of the increase in business from the physician, Guardant’s South Texas sales team was recognized as one of the best performing regions in 2022,” the Attorney's Office said. Guardant allegedly submitted claims to and received payments from Medicare despite having a financial relationship with the physician’s immediate family member, in violation of the law.

In addition to the payment to settle the false claims allegations, Guardant agreed to pay more than $31,000 in an administrative settlement with the Defense Health Agency. The agency was acting in the case on behalf of the Tricare uniformed services healthcare program.