Medical Laboratory Testing Company uBiome Raided by FBI for Alleged Insurance Fraud and Questionable Business Practices
Following the raid, the company’s co-founders resigned from the board of directors
Microbiome testing company, uBiome, a biotechnology developer that offers at-home direct-to-consumer (DTC) test kits to health-conscious individuals who wish to learn more about the bacteria in their gut, or who want to have their microbiome genetically sequenced, has recently come under investigation by insurance companies and state regulators that are looking into the company’s business practices.
CNBC reported that the Federal Bureau of Investigation (FBI) raided the company’s San Francisco headquarters in April following allegations of insurance fraud and questionable billing practices. The alleged offenses, according to CNBC, included claims that uBiome routinely billed patients for tests multiple times without consent.
Becker’s Hospital Review wrote that, “Billing documents obtained by The Wall Street Journal and described in a June 24 report further illustrate uBiome’s allegedly improper billing and prescribing practices. For example, the documents reportedly show that the startup would bill insurers for a lab test of 12 to 25 gastrointestinal pathogens, despite the fact that its tests only included information for about five pathogens.”
Company Insider Allegations Trigger FBI Raid
In its article, CNBC stated that “company insiders” alleged it was “common practice” for uBiome to bill patients’ insurance companies multiple times for the same test.
“The company also pressured its doctors to approve tests with minimal oversight, according to insiders and internal documents seen by CNBC. The practices were in service of an aggressive growth plan that focused on increasing the number of billable tests served,” CNBC wrote.
FierceBiotech reported that, “According to previous reports, the large insurers Anthem, Aetna, and Regence BlueCross BlueShield have been examining the company’s billing practices for its physician-ordered tests—as has the California Department of Insurance—with probes focusing on possible financial connections between uBiome and the doctors ordering the tests, as well as rumors of double-billing for tests using the same sample.”
Becker’s Hospital Review revealed that when the FBI raided uBiome they seized employee computers. And that, following the raid, uBiome had announced it would temporarily suspend clinical operations and not release reports, process samples, or bill health insurance for their services.
The company also announced layoffs and that it would stop selling SmartJane and SmartGut test kits, Becker’s reported.
uBiome Assumes New Leadership
Following the FBI raid, uBiome placed its co-founders Jessica Richman (CEO) and Zac Apte (CTO) on administrative leave while conducting an internal investigation (both have since resigned from the company’s board of directors). The company’s board of directors then named general counsel, John Rakow, to be interim CEO, FierceBiotech reported.
After serving two months as the interim CEO, Rakow resigned from the position. The interim leadership of uBiome was then handed over to three directors from Goldin Associates, a New York City-based consulting firm, FierceBiotech reported. They include:
- Curtis Solsvig, as Chief Executive Officer;
- Robin Chiu, as Chief Financial Officer; and
- Karthik Bhavaraju, as Chief Operating Officer.
Four testing products remain available for in-home testing on the uBiome website:
- Explorer: allows consumers to learn about their microbiome through advanced DNA sequencing.
- SmartGut: identifies microbes in the gut that affect health and detects micro-organisms associated with gut illnesses, such as irritable bowel syndrome (IBS), inflammatory bowel disease (IBD), ulcerative colitis, and Crohn’s disease.
- SmartJane: a women’s health screening test that genotypes 19 strains of Human papillomavirus (HPV), four sexually-transmitted diseases (chlamydia, gonorrhea, syphilis, and mycoplasma genitalium), and the balance of vaginal flora.
- SmartFlu: a nasal microbiome swab that detects bacteria and viruses associated with the flu, the common cold, and bacterial infections.
What Went Wrong?
Richman and Apte founded uBiome in 2012 with the intent of marketing a new test that would prove a link between peoples’ microbiome and their overall health. The two founders initially raised more than $100 million from venture capitalists, and, according to PitchBook, uBiome was last valued at around $600 million, Forbes reported.
Nevertheless, as a company, uBiome’s future is uncertain. Of greater concern to clinical laboratory leaders is whether at-home microbiology self-test kits will become a viable, safe alternative to tests traditionally performed by qualified personnel in controlled laboratory environments.
Dark Daily reported on the controversy surrounding this trend in “At-Home Microbiology Tests Trigger Concerns about Scientific Value and Impact from Microbiologists and Clinical Laboratory Scientists,” October 16, 2017.
It’s a trend worth watching.
—JP Schlingman
Related Information:
FBI Investigating uBiome’s Billing Practices
Turmoil Persists at uBiome with New Management Overhaul Amid FBI Probe: Reports
uBiome Appoints John Rakow as Interim Chief Executive Officer
Another Shakeup at uBiome: Interim CEO Quits
Seven Updates on the Ongoing uBiome Investigation
Microbiome Startup uBiome Cofounders on Administrative Leave after Reports of FBI Raid
Microbiome Testing Startup Under Scrutiny for Billing Practices
