IMPATH Delisted by Nasdaq, Under Investigation by SEC

Onetime high-flying pathology company now faces incredible scrutiny on almost all fronts

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EFFECTIVE AUGUST 27, Nasdaq Stock Market, Inc. delisted the stock of IMPATH, Inc. Less than a week earlier, IMPATH had disclosed that it was under investigation by the Securities and Exchange Commission (SEC).

IMPATH can truly be described as a company under siege. It is short of cash, under regulatory investigation, and defending itself from at least 13 class action shareholder lawsuits.

The financial community attributes much of IMPATH’s woes to its oft-criticized accounting for account receivables and other policies on how to allocate income and expenses. There are strong reasons to believe this to be true.

Other Undisclosed Issues?

However, THE DARK REPORT suspects there may be another troubling dimension to IMPATH’s existing problems. There may be Medicare compliance problems of notable magnitude. Known facts support this speculation.

First, for many years, IMPATH has aggressively coded and billed for its diagnostic services. Compared to most laboratories, IMPATH has been willing to perform and bill for substantially more test markers per case—by a factor of two or three. For example, if common practice in the laboratory industry was to perform and bill for, say, five to seven markers on a breast cancer case, IMPATH was known to often bill more than 20 markers. This was common practice in other areas of its oncology testing menu. Second, Medicare revenues are a significant component of IMPATH’s payer mix. If one holds an opinion that IMPATH, by deciding to perform high numbers of tumor markers per case, was performing procedures that could be challenged as medically unnecessary, then the act of billing Medicare for those markers would possibly violate several compliance laws and regulations.

Assume that the above is true. Then the following scenario is a possibility. Since IMPATH sacked its long-time Chair and CEO, Anu Saad, Ph.D., earlier this year, a new CEO has undertaken a comprehensive review of IMPATH’s legal and regulatory compliance. If its outside experts identified that IMPATH’s practice of performing two and three times the number of tumor markers per case (compared to the rest of the lab industry) to be excessive, then IMPATH’s current executive team has a much greater problem; one that eclipses its problems with accounting issues and shareholder lawsuits.

It is possible that IMPATH believes it has potential exposure with Medicare for a portion of its past billings. Because these practices go back as far as ten years, potential exposure might amount to tens of millions of dollars, along with exposure to civil and criminal penalties. If this speculation is accurate, then what may be giving IMPATH’s new executive team pause is the daunting amount of money that would be needed to settle with Medicare.


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