By Fisher, JD, CHC, CCEP
San Diego Laboratory Agrees to $2 Million Settlement Over Allegedly Unnecessary Breast Cancer Testing
A San Diego diagnostic laboratory agreed to pay $2 million to resolve federal allegations that it submitted, and caused others to submit, false claims to Medicare for Breast Cancer Index tests that were not medically reasonable and necessary. The settlement centered on whether the laboratory’s use of the tests was supported by clinical evidence and Medicare coverage requirements.
Background on the Test
Breast Cancer Index testing is used to help assess certain breast cancer recurrence risks and treatment considerations. In this matter, however, the government’s concern was not simply that the test existed or could be useful in some situations. The issue was whether the test was being used for patients whose clinical circumstances made the test reasonable and necessary for Medicare reimbursement.
The government alleged that Biotheranostics Inc. knowingly promoted and performed Breast Cancer Index testing for breast cancer patients who had not been in remission for five years and who had not been taking tamoxifen. According to the allegations, published clinical trial data and clinical practice guidelines did not support BCI testing for patients who fell outside those circumstances, making the related Medicare claims improper.
False Claims Act Concerns
Medicare generally pays only for services that are reasonable and necessary for diagnosing or treating an illness or injury. When a provider bills Medicare for services that do not meet that standard, the government may view those claims as false or improper. The settlement resolved allegations under the False Claims Act, but it did not constitute a determination that the company was liable.
The case underscores a core principle of Medicare billing: a service must be supported by clinical necessity before it is provided and billed to a federal health care program. For laboratories and other providers, the settlement is a reminder that marketing practices, ordering criteria, documentation, and billing protocols should align with current evidence and applicable coverage standards.
Compliance Takeaways
Providers should periodically review whether the services they offer are supported by current medical literature, payer guidance, and patient-specific documentation. They should also ensure that sales and marketing teams do not encourage testing beyond supported clinical indications. Strong internal controls can help reduce the risk that questionable services become routine billable claims.
Ultimately, the settlement illustrates how medical necessity remains central to health care fraud enforcement. Even where a diagnostic test may have legitimate uses, providers must be prepared to show that each billed service was appropriate for the patient, supported by the evidence, and consistent with Medicare’s requirements.
