DermTech Settles US Claims Over Unreliable Skin Cancer Tests

By Aren Karapetyan, MD Sep 3, 2026

Fact checked by Amalya Sargsyan, MD

Medically reviewed by Amalya Sargsyan, MD

A US skin cancer testing company has agreed to settle allegations that it billed Medicare for potentially unreliable melanoma tests. DermTech Inc., now known as DTech Liquidating Inc., agreed to a settlement valued at up to $5 million, the US Department of Justice announced on August 26. The company filed for Chapter 11 bankruptcy protection in 2024 and is now being liquidated.

The case concerns a noninvasive test that was designed to help doctors decide whether a suspicious skin lesion should be biopsied. Clinicians used adhesive patches to collect cells from the lesion’s surface, and the sample was analyzed for RNA markers associated with melanoma.
Medicare provided limited coverage for the test when a doctor was considering whether to perform a biopsy. It was intended to provide additional information rather than replace the doctor’s assessment of the lesion, the patient’s history and other clinical findings. Federal prosecutors say DermTech continued billing Medicare even when two separate testing problems raised questions about the reliability of its results.

Questions Over Test Reliability

The first issue occurred between October 2022 and March 2023, when DermTech changed the positive control range for one of the test’s two main melanoma markers. A positive control helps a laboratory confirm that a test is working properly. The government alleges that DermTech had not validated the new range. Without that validation, the company could not confirm that the control was functioning or that the test results were accurate.
The second issue involved samples tested between January 2020 and February 2022. According to the Justice Department, some samples did not contain enough patient RNA to be analyzed reliably. DermTech nevertheless allegedly produced positive or negative results, reported them to patients and their doctors, and billed Medicare for the tests.

The government also says that when concerns were raised, DermTech did not withdraw the affected results or adequately reimburse Medicare.
It remains unclear how many patients received the tests, how many results may have been inaccurate and how much Medicare paid for them. The Justice Department has not identified a patient whose melanoma was missed or who underwent an unnecessary biopsy because of an affected result. Still, the reliability of the results mattered because the test could influence what happened next.
A positive result could contribute to a decision to biopsy a lesion. A negative result could be considered alongside the lesion’s appearance and the patient’s medical history when deciding whether to monitor it rather than perform an immediate biopsy. An unreliable positive result could contribute to an avoidable procedure, while an unreliable negative result could provide false reassurance. These are possible risks based on the intended use of the test. The settlement does not establish that either occurred in a particular patient.

What the Settlement Means

Although the settlement is valued at up to $5 million, it does not require an immediate $5 million cash payment. DermTech filed for Chapter 11 bankruptcy protection in June 2024 after reviewing its financial and strategic options. The company planned to sell substantially all its assets while continuing to process test orders during the bankruptcy proceedings.

As part of the settlement, the United States received an allowed general unsecured claim of $5,038,011 in the bankruptcy case. This means the government can receive a share of the money distributed to unsecured creditors. The final recovery could be lower and will depend on how much remains available in the bankruptcy estate. The allegations apply to the former DermTech Inc., now DermTech Liquidating Inc. They do not apply to DermTech LLC, which purchased the former company’s assets in 2024 and continued operations under new ownership.

How the Case Started

The case began with a lawsuit filed by a former DermTech employee under the whistleblower provisions of the False Claims Act. The law allows private individuals to bring cases on behalf of the US government when they believe false claims have been submitted for public money. Whistleblowers may receive part of any amount the government recovers.

The former employee, identified in court records as Ms. Luong, will receive 20% of the money the government ultimately collects through the bankruptcy case. The settlement resolves the government’s civil claims, but it is not an admission of wrongdoing. DTech denied the allegations, and no court has determined that the company violated the law.

The case highlights the importance of laboratory quality controls when test results are used to guide decisions about cancer biopsies. It also shows how concerns about test reliability can become an issue not only for patients and doctors, but also for Medicare and federal regulators.

Written by Evelina Khachaturova

Author

Aren Karapetyan

Aren Karapetyan is a practicing radiation oncologist at Erebuni Radiotherapy Center and an active media professional serving as a content creator and editor-in-chief for OncoDaily RT. His clinical work focuses on specialized radiotherapy for head and neck as well as genitourinary cancers also he evaluates new research as a peer reviewer.

Fact checked by Amalya Sargsyan MD Amalya Sargsyan, MD, MSc, is a medical oncologist in Yerevan, Armenia, and Vice President of Research & Intelligence at OncoDaily. She heads the Sarcoma Service at D'Clinic, treats adult solid tumors at the Adult Solid Tumors and Chemotherapy Clinic of the Yeolyan Hematology and Oncology Center, and leads the Adult Solid Tumor Team at the Immune Oncology Research Institute. Her clinical practice covers sarcoma, gastrointestinal cancers, and adolescent and young adult (AYA) oncology. She earned her MD and completed medical oncology residency at Yerevan State Medical University, then an MSc in Precision Medicine in Clinical Practice at the University of Cyprus. Her sarcoma training began at the Bank of Cyprus Oncology Centre and continued through a three-month fellowship at the Sarcoma Unit of Fondazione IRCCS Istituto Nazionale dei Tumori in Milan, organized with the European School of Oncology, followed by observerships at Memorial Sloan Kettering Cancer Center and the sarcoma program at Stanford Medicine. She trained in gastrointestinal oncology under the mentorship of Yelena Janjigian at MSK, as a recipient of the ASCO Conquer Cancer International Development and Education Award and Memorial Sloan Kettering GI Oncology International Training Award. Her research addresses access and equity in cancer care in low- and middle-income countries. She is principal investigator of the IMMONKG study, a multinational retrospective cohort examining alternative immune checkpoint inhibitor dosing strategies across LMICs, and first author of the JCO Global Oncology analysis of immunotherapy access in Armenia's out-of-pocket health system (Sargsyan et al., 2025). She has authored and contributed to peer-reviewed publications in journals including Nature Reviews Clinical Oncology, JCO Global Oncology, The Lancet Oncology, and Expert Review of Gastroenterology & Hepatology. She has received ESMO Leadership and Career Development Award in 2026, the ESMO Merit Award twice and the ASCO Conquer Cancer International Development and Education Award. At OncoDaily she directs the Research & Intelligence unit, overseeing global oncology content strategy, editorial operations across six disease verticals, and more than 50 scientific events a year - including the How I Treat virtual summit series. She is an Adjunct Assistant Professor at Yerevan State Medical University, founder of the Young Oncology Group of Armenia, and founder of the ASCO Oncology Student Interest Group at Yeolyan.

Medically reviewed by Amalya Sargsyan MD Amalya Sargsyan, MD, MSc, is a medical oncologist in Yerevan, Armenia, and Vice President of Research & Intelligence at OncoDaily. She heads the Sarcoma Service at D'Clinic, treats adult solid tumors at the Adult Solid Tumors and Chemotherapy Clinic of the Yeolyan Hematology and Oncology Center, and leads the Adult Solid Tumor Team at the Immune Oncology Research Institute. Her clinical practice covers sarcoma, gastrointestinal cancers, and adolescent and young adult (AYA) oncology. She earned her MD and completed medical oncology residency at Yerevan State Medical University, then an MSc in Precision Medicine in Clinical Practice at the University of Cyprus. Her sarcoma training began at the Bank of Cyprus Oncology Centre and continued through a three-month fellowship at the Sarcoma Unit of Fondazione IRCCS Istituto Nazionale dei Tumori in Milan, organized with the European School of Oncology, followed by observerships at Memorial Sloan Kettering Cancer Center and the sarcoma program at Stanford Medicine. She trained in gastrointestinal oncology under the mentorship of Yelena Janjigian at MSK, as a recipient of the ASCO Conquer Cancer International Development and Education Award and Memorial Sloan Kettering GI Oncology International Training Award. Her research addresses access and equity in cancer care in low- and middle-income countries. She is principal investigator of the IMMONKG study, a multinational retrospective cohort examining alternative immune checkpoint inhibitor dosing strategies across LMICs, and first author of the JCO Global Oncology analysis of immunotherapy access in Armenia's out-of-pocket health system (Sargsyan et al., 2025). She has authored and contributed to peer-reviewed publications in journals including Nature Reviews Clinical Oncology, JCO Global Oncology, The Lancet Oncology, and Expert Review of Gastroenterology & Hepatology. She has received ESMO Leadership and Career Development Award in 2026, the ESMO Merit Award twice and the ASCO Conquer Cancer International Development and Education Award. At OncoDaily she directs the Research & Intelligence unit, overseeing global oncology content strategy, editorial operations across six disease verticals, and more than 50 scientific events a year - including the How I Treat virtual summit series. She is an Adjunct Assistant Professor at Yerevan State Medical University, founder of the Young Oncology Group of Armenia, and founder of the ASCO Oncology Student Interest Group at Yeolyan.