uBiome, the health start-up just raided by the FBI, had been double billing insurers

The FBI raided uBiome’s San Francisco office on April 25

The FBI raided the San Francisco office of health start-up uBiome on Friday, because of the questionable ways the company has billed consumers.

Federal agents showed up at the office at 360 Langton Street in the South of Market neighborhood for  “court-authorized law enforcement activity,” an FBI spokesperson wrote in a statement to CNBC, adding that the investigation is “ongoing. The Wall Street Journal first reported on the raid. 

UBiome sells health tests called SmartGut and SmartJane for people who want to monitor their gut health. The company bills insurers after physicians prescribe the products. 

In the past few months, CNBC spoke with three people familiar with the company’s operations and learned that uBiome was routinely charging patients’ plans twice for tests using the same sample and without notifying them. The people requested anonymity as they were not authorized to speak about uBiome.

Jessica Richman, uBiome’s CEO, could not be reached for comment. Richman told the Wall Street Journal that she had “no knowledge whatsoever,” of the search, but a person familiar with the matter told CNBC that some employees were told to stay home from work on Friday. The person, who asked not to be named because the matter is confidential, also said that the FBI broke down the door of the company’s offices and requested access to employees’ computers.

Employees leaving uBiome’s offices on Friday, after an FBI search.

Laura Batchelor, CNBC

The search began on Friday morning, according to people on the scene. At the time of publication, CNBC producer Laura Batchelor said that at least four federal agents remained inside the company’s office and their cars were still parked outside.

“We are cooperating fully with federal authorities on this matter,” said a uBiome spokesperson. “We look forward to continuing to serve the needs of healthcare providers and patients.”

Health insurer Anthem flagged uBiome internally for its over-billing practices, said two people familiar with the matter, who asked not to be named because the case is still ongoing. Anthem did not immediately return a request for comment.

The science behind UBiome’s tests is still early in its development. Some scientists are skeptical of tests that claim to provide insight into the microbiome, the community of microorganisms that live in the digestive tract, because they say the results aren’t supported by scientific research.

UBiome told CNBC in January that it had laid off more than 50 of its 300 employees in an effort to “realign operations.” The company has raised more than $100 million in venture funding from firms including 8VC and Y Combinator.

— CNBC’S Laura Batchelor contributed to this report.

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