On June 25, 2018, Pomerantz LLP was appointed Co-Lead Counsel in a class action lawsuit against Myriad Genetics, Inc. (“Myriad” or the “Company”) and certain of its officers. The class action, filed in United States District Court, District of Utah, and docketed under 18-cv-00336, is on behalf of a class consisting of investors who purchased or otherwise, acquired common shares of Myriad between August 13, 2014, and March 12, 2018, both dates inclusive (the “Class Period”). Plaintiff seeks to recover compensable damages caused by Defendants’ violations of the federal securities laws and to pursue remedies under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5 promulgated thereunder.
Myriad develops and markets molecular diagnostic products to provide physicians with information to help guide the care of their patients, to prevent disease, delay the onset of disease, and catch disease at an early stage. Myriad purports to employ a variety of proprietary techniques designed to provide an understanding of the genetic basis of disease and the role of genes in the onset, progression, and treatment of disease.
Established in 1978, the Healthcare Common Procedure Coding System (“HCPCS”) provides a standardized coding system for describing the specific items and services provided in healthcare. HCPCS dictates the billing codes in the claims that physicians, healthcare providers and suppliers, such as Myriad, submit to the Centers for Medicare and Medicaid Services (“CMS”). The National Correct Coding Initiative (“NCCI”), a CMS program designed to prevent improper payment of procedures that should not be submitted together, provides further instruction with respect to correct billing practices. Among other things, the NCCI provides that billing documents must contain numerical code pairs, reflected in adjacent columns, identifying the services provided. As CMS has stated in its billing guidance documents, “[t]he underlying principle is that the second code defines a subset of the work of the first code. Reporting the codes separately is inappropriate. Separate reporting would trigger a separate payment and would constitute double billing.”
In September 2013, Myriad launched its proprietary 25-gene myRisk Hereditary Cancer test (“myRisk”), which includes testing for multiple genes associated with cancer, including BRCA1 and BRCA2, both of which are associated with breast and ovarian cancer. BRCA1 and BRCA2 genetic testing—specifically, BRCA sequencing and BRCA duplication-deletion—are represented in HCPCS by codes 81211 and 81213. CMS has clearly stated that codes 81211 and 81213 are not correctly used together in claim submissions.
The Complaint alleges that throughout the Class Period, Defendants made materially false and misleading statements regarding the Company’s business, operational and compliance policies. Specifically, Defendants made false and/or misleading statements and/or failed to disclose that: (i) Myriad was submitting false or otherwise improper claims for payment under Medicare and Medicaid for the Company’s hereditary cancer testing; (ii) the foregoing conduct would foreseeably subject Myriad to heightened regulatory scrutiny and/or enforcement action; (iii) Myriad’s revenues from its hereditary cancer testing were in part the product of improper conduct and unlikely to be sustainable; and (iv) as a result, Myriad’s public statements were materially false and misleading at all relevant times.
On March 12, 2018, post-market, Myriad disclosed that it had received a subpoena from the Department of Health and Human Services, Office of Inspector General, in connection with “an investigation into possible false or otherwise improper claims submitted for payment under Medicare and Medicaid,” specifically relating to Myriad’s hereditary cancer testing. The subpoena covers a time period from January 1, 2014—less than four months after the September 2013 launch of Myriad’s myRisk test—through the date of the subpoena’s issuance.
On this news, Myriad’s share price fell $4.01, or 12.14%, to close at $29.01 on March 13, 2018.