FBI raids uBiome’s San Francisco HQ over insurance billing practices: reports

The FBI has raided the San Francisco headquarters of sequencing-based test provider uBiome, as part of a snowballing investigation into the company by law enforcement agencies, state regulators and insurance companies.

The Friday morning search, first reported by The Wall Street Journal, centers around the startup’s practices of billing insurers for its consumer-focused and physician-ordered tests focused on the body’s microbiome.

uBiome’s at-home offerings include Explorer, for gut wellness, food and lifestyle; SmartGut, a stool test aimed at chronic conditions such as inflammatory bowel disease, Crohn’s and ulcerative colitis; and the women’s health test SmartJane, which detects sexually transmitted infections, strains of HPV and different types of vaginal microbes. It also offers SmartFlu, a nasal swab test for upper respiratory infections.

The company raised $83 million in venture capital funding last September, from OS Fund, Y Combinator and others, to support its first foray into drug development—while also signing on former Novartis CEO Joe Jimenez to its board of directors.

RELATED: uBiome grabs $83M, new digs and Joe Jimenez as it expands into therapeutics

A number of large insurers, including Anthem, Aetna and Regence BlueCross BlueShield, have been looking into the company internally—while the California Department of Insurance has also been examining its billing practices, according to the report. The department told the WSJ it has been collaborating with the FBI on an investigation, but would not confirm or deny its target was uBiome.

Some of the probes have focused on the doctors ordering the tests, and their possible financial connections to uBiome, according to the WSJ. The company’s website says tests can be requested by a user’s physician, or remotely through uBiome’s own “external clinical care network.”

“We are cooperating fully with federal authorities on this matter. We look forward to continuing to serve the needs of health-care providers and patients,” a uBiome spokeswoman told the WSJ.

According to CNBC, sources familiar with the company’s work said uBiome has been routinely double-billing patients’ insurance plans for tests using the same sample, and that uBiome employees were asked to turn over their computers to the FBI after agents broke down the door.

Meanwhile, a search of uBiome customer reviews by Gizmodo found several complaints, with some calling the company “unethical” and a “scam”—including stories of insurance companies being billed more than once, or insurers being charged thousands for a consumer test that lists on uBiome’s website for $89.