Caris Life Sciences: Delaying the Order to Change Who Bills Medicare

In the Caris Life Sciences settlement, the company agreed to pay $2,886,674 over nationwide allegations that it improperly billed Medicare by circumventing the program’s fourteen-day rule for laboratory tests. The allegations reached into the order itself: when a physician requested testing, whether that order was canceled and replaced, and whether Caris billed Medicare directly. The alleged scheme made cancer testing wait for a billing deadline.

The Justice Department announced the civil settlement on June 1, 2022. It covered Caris Molecular Intelligence and the ADAPT Biotargeting System and resolved claims brought through whistleblower cases under the False Claims Act. A later settlement involving LabCorp and University Health System concerned their part in submitting orders for Caris testing.

What the Caris Life Sciences Settlement Alleged

The government alleged that Caris sought direct Medicare payment through three billing practices, including cancellation and replacement of physician orders after the fourteen-day period.

Caris, a molecular science company headquartered in Texas, developed predictive genetic marker tests used primarily for cancer patients. The government’s announcement describes tests that detect the activity of certain genes within a breast tumor to help predict the risk of recurrence. Oncologists and other physicians use those results to help determine treatment options.

The government’s account of the billing allegations identifies three routes:

1. Direct billing after an inpatient discharge. Caris allegedly sought reimbursement from Medicare for tests ordered and submitted for testing within fourteen days after the patient left the hospital. The hospital had already received a lump-sum Diagnosis-Related Group payment covering the inpatient service. The government alleged that Caris’s separate claim made Medicare pay for the same service twice: once through the hospital payment and once directly to Caris.

1. Canceled orders replaced after the deadline. Caris allegedly sought direct reimbursement while failing to discourage providers from canceling orders placed within fourteen days after an inpatient or outpatient discharge and placing new orders after that period. The allegation concerns what happened to an existing request for testing. A new order date could make the request appear to belong outside the hospital payment window.

1. Direct billing after an outpatient procedure. Caris allegedly sought reimbursement for tests ordered within fourteen days of a Medicare beneficiary’s outpatient procedure.

The second allegation is particularly revealing for an insider. The government described Caris’s failure to discourage providers from canceling and replacing orders. That puts the relationship between the laboratory and the ordering provider inside the story, along with the claim Caris submitted. Who controlled the order and who sought payment were separate questions.

Why the Fourteen-Day Rule Changed Who Could Bill Medicare

The fourteen-day rule governed who could bill Medicare for certain laboratory services. In the circumstances described in the Caris announcement, testing tied to a hospital encounter belonged in the hospital’s payment, and the performing laboratory had to look to the hospital for its money.

This is the economic significance of the date of service. Ordinarily, a laboratory test takes the date the specimen was collected. For a specimen collected during a hospital encounter, that date can place the test inside the hospital’s bundled payment. The laboratory performs the work, bills the hospital, and receives payment through that relationship. A separately payable test gives the laboratory a different customer for its claim: Medicare itself.

The Justice Department described the rule, as it applied then, as barring separate laboratory billing when the physician ordered the test within fourteen days after discharge. Its later LabCorp and University Health System announcement makes the hospital’s role explicit: for testing within the window, the laboratory had to bill the hospital facility instead. That is why an order held for later submission, or replaced after cancellation, mattered to reimbursement.

For the inpatient claims, the government alleged that taxpayers paid twice for the same laboratory work. A second bill, with no extra service.

The rules also changed. Effective January 1, 2018, Medicare added an exception allowing direct laboratory billing for qualifying molecular pathology tests after an outpatient’s discharge.

The LabCorp and University Health System Payment

LabCorp and University Health System paid $388,667 to resolve their own alleged role in delaying submission of physician orders for Caris tests. The Justice Department announced that settlement on January 2, 2025. This smaller, provider-side payment followed Caris’s nationwide settlement.

University Health System operates University of Tennessee Medical Center. LabCorp provided clinical laboratory services through Labcorp Tennessee at the medical center’s outpatient laboratory. The government alleged that University Health System and Labcorp Tennessee delayed submission of orders between March 2012 and November 2023 by holding them or canceling and resubmitting them until fourteen days after discharge.

The government alleged that these organizations knowingly caused false claims to reach Medicare through that practice. The physician’s request, its handling at the hospital and outpatient laboratory, and the resulting Caris claim were all parts of the alleged mechanism. An employee handling submissions could therefore see a decision relevant to the claim even without working for the laboratory that ultimately performed the test.

The Tennessee case began with a whistleblower, who received a 19% share of the recovery. A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers.

What the Order, Test and Claim Show Together

An order-timing case depends on connecting the physician’s request to the hospital encounter, the laboratory work and the claim for payment. The government’s announcements discuss both the date a physician ordered a test and the date the laboratory performed it. They describe direct billing for testing performed more than fourteen days after discharge. Submission of the order to the testing laboratory is a separate event. When the allegation is that an order was held or replaced, a final submission date alone cannot explain the payment.

The person who sees an order change may know something that is missing from the billing record alone.

The laboratory’s role in communicating payment requirements has long been recognized. In its 1997 article Model Plan Helps Laboratories Fight Fraud, Laboratory Medicine described federal recommendations for written laboratory policies, requisition forms that document medical necessity, and annual notices explaining billing and coverage to ordering physicians. The article also described auditing and record retention as parts of the compliance plan. The laboratory’s relationship with the ordering physician was part of that plan, along with its internal billing work.

That connection matters here because one Caris allegation concerned providers canceling and replacing orders. A laboratory’s communications about how an order should arrive can be as revealing as the claim submitted afterward. The practical question is what changed between the physician’s original request and the request used for billing, and who understood the payment consequence.

For a laboratory or hospital insider, the useful knowledge may be quite specific: how orders were held, why a request was canceled, or why a replacement appeared after discharge. We examine that account alongside the testing and payment records. The strongest explanation connects the people handling the request to the money the claim sought, without requiring one employee to have seen every part of the transaction.

Where Caris allegedly sought direct Medicare payment, Genomic Health allegedly gave hospitals kickbacks by failing to send timely invoices for tests covered by the fourteen-day rule and writing off the unpaid fees.

You Saw What Happened to the Order

If you handled orders that were held, canceled or replaced to change who paid for testing, speak to one of our Whistleblower Experts about the billing decisions you saw. We build the laboratory fraud case with you and bring in healthcare fraud whistleblower lawyers who understand hospital payment rules and molecular testing. We stay with you through the whole journey to build your strongest laboratory fraud whistleblower case.