Important Court Rulings & Pending New Federal Law 

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IMPORTANT THINGS ARE HAPPENING WITH COURT DECISIONS AND PROPOSED FEDERAL LEGISLATION that will affect a substantial number of the nation’s clinical laboratories and anatomic pathology groups. In this issue of The Dark Report, you’ll be alerted to those developments we think will have the biggest impact on laboratory compliance and legal risk. 

The first of these developments is presented here. The Verifying Accurate Leading-edge IVCT Development (VALID) Act is a bill pending in Congress that would give the federal Food and Drug Administration (FDA) oversight for laboratory-developed tests (LDTs). In recent weeks, a large number of academic pathologists have expressed their opposition to this law as currently written. Some proponents are hoping to attach this bill to the pending bill to reauthorize FDA user fees. If that happens, there would be no Congressional debate about the language of the VALID Act. 

The intelligence briefing that follows analyzes Advisory Opinion 22-09 recently issued by the HHS Office of the Inspector General (OIG). This opinion finds that a proposed plan to pay hospitals a “fair-market rate on a per-patient basis to collect, process, and test specimens” would be considered a violation of the federal Anti-Kickback Statute. (See this story.) 

Next, we cover the jury decision in the trial of Ramesh “Sunny” Balwani, the ex-COO of Theranos and paramour (at that time) of former Theranos CEO Elizabeth Holmes. Balwani was convicted on all 12 counts of conspiracy and wire fraud. He and Holmes will be sentenced later this year. (See this story.) 

Every lab relies on in vitro diagnostics (IVD) manufacturers for instruments, analyzers, test kits, and other products. In this story, we present the insights from four experts on the current state of the IVD industry. This includes supply chain issues and a shortage of managers and service reps, along with a disruption in the development of the next generation of products because of the pandemic. 

The remaining intelligence briefing in this issue covers an important ruling by a federal judge in California in the case of United States vs. Mark Schena. The judge ruled that payment of percentage-based sales commissions for marketing to physicians and referral sources is a violation of EKRA. This has significant implications for many laboratories. (See this story.)

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