Securities Lawyers Blog
The investment fraud lawyers at Gana Weinstein LLP are investigating reports and accusations that health start-up uBiome routinely billed patients multiple times without consent and pressured doctors to approve tests. According to a CNBC report in May 2019, the FBI raided the company’s offices its co-CEOs and founders Jessica Richman and Zac Apte went on administrative leave. Our firm is analyzing private placement offerings by uBiome and believe that brokerage firms that sold this investment may have done so unsuitably and otherwise failed to conduct due diligence would have revealed problems with the company.
The company’s product, the SmartGut test, promised users to provide new insights into the bacterial makeup so that they can make improvements to their health. However, according to users and CNBC report when patients one one test uBiome sends multiple kits in the mail. uBiome then charges insurance companies for these tests which are reported to be up to $2,970 per test. According to CNBC’s investigation uBiome was routinely billing patients multiple times without their consent causing insurance plans to start rejecting claims. In addition, uBiome has been accused of pressuring doctors to approve tests with minimal oversight.
It is possible that uBiome sought to over bill in order to increase the valuation of the company to investors. uBiome was founded in 2012. The company raised more than $100 million in venture funding and was valued at about $300 million at its most recent round of financing last September. The company reported used used billable samples, rather than reimbursement rates, as the key growth metric for the company and routinely shared these figures with investors.
Brokers have a responsibility treat investors fairly which includes obligations such as making only suitable investments for the client after conducting due diligence. Due diligence includes an investigation into the investment’s properties including its benefits, risks, tax consequences, issuer, history, and other relevant factors. Appropriate due diligence would identify that an alternative investment’s high costs, illiquidity, and conflicts of interests that would make the investment not suitable for investors.
Investors who have suffered losses are encouraged to contact us at (800) 810-4262 for consultation. At Gana Weinstein LLP, our attorneys are experienced representing investors who have suffered securities losses due to the mishandling of their accounts. Claims may be brought in securities arbitration before FINRA. Our consultations are free of charge and the firm is only compensated if you recover.