No class action or securities fraud lawsuit has been filed against Castle Biosciences as of mid-2026, but the Castle Biosciences lawsuit picture is not empty: at least three law firms opened securities investigations after a sharp 2023 stock drop, the company paid a federal settlement in January 2026 over employing an excluded healthcare worker, and its flagship melanoma test remains caught between Medicare coverage and commercial insurer denials.
The 2023 Securities Investigations
On June 2, 2023, Castle Biosciences presented clinical trial results for its IDgenetix pharmacogenomic test at the American Society of Clinical Oncology annual meeting. IDgenetix, acquired through Castle’s 2022 purchase of AltheaDx, is designed to guide medication selection for patients with moderate to severe depression.1Bragar Eagel & Squire, P.C. CSTL Investigation The market reaction was severe. Castle’s share price fell $11.07, or roughly 49%, from $22.73 to $11.66 by the close of trading on June 5, 2023.2BusinessWire. Kirby McInerney LLP Continues Investigation of Shareholder Claims Against Castle BioSciences
The drop drew at least three plaintiffs’ firms. Bragar Eagel & Squire, P.C. announced an investigation into potential federal securities law violations tied to the company’s disclosures.1Bragar Eagel & Squire, P.C. CSTL Investigation The Schall Law Firm said it was examining whether Castle “issued false and/or misleading statements and/or failed to disclose information pertinent to investors.”3Financial Content. The Schall Law Firm Announces Investigation of Claims Against Castle Biosciences Kirby McInerney LLP announced its own investigation on June 9, 2023, and issued a continuation notice a week later.4BusinessWire. Kirby McInerney LLP Announces an Investigation of Shareholder Claims Against Castle Biosciences
None of it turned into a filed complaint. The Schall Law Firm’s own notice acknowledged that “the class in this case has not yet been certified,” and Kirby McInerney described its work as an ongoing investigation rather than a lawsuit.3Financial Content. The Schall Law Firm Announces Investigation of Claims Against Castle Biosciences2BusinessWire. Kirby McInerney LLP Continues Investigation of Shareholder Claims Against Castle BioSciences As of mid-2026, no securities complaint against Castle Biosciences has surfaced in publicly available records from any of these firms, and no class period has been designated.
The $112,917 Federal Settlement
On January 9, 2026, Castle Biosciences agreed to pay $112,917.55 to resolve allegations that it violated the Civil Monetary Penalties Law by employing an individual who had been excluded from participation in federal healthcare programs. The U.S. Department of Health and Human Services Office of Inspector General alleged that Castle “knew or should have known” the individual was excluded.5HHS Office of Inspector General. Castle Biosciences Agreed to Pay $112,000 for Allegedly Violating the Civil Monetary Penalties Law
The settlement followed a self-disclosure by the company to the OIG, meaning Castle reported the issue to the government itself rather than waiting for an audit or investigation to uncover it. The OIG’s public enforcement notice does not identify the excluded individual, describe their role at the company, or state how long the employment lasted.5HHS Office of Inspector General. Castle Biosciences Agreed to Pay $112,000 for Allegedly Violating the Civil Monetary Penalties Law For a company that reported 883 full-time employees at the end of 2025, the amount is small. The matter matters more as an example of the regulatory scrutiny that follows any company billing federal healthcare programs.6Castle Biosciences. Investor Relations
Insurance Disputes Over the DecisionDx-Melanoma Test
Castle’s most commercially significant product, DecisionDx-Melanoma, sits at the center of an ongoing conflict between Medicare coverage and private insurer denials. The test uses a 31-gene expression profile to predict the risk of melanoma recurrence and sentinel lymph node biopsy positivity.7Castle Biosciences. Castle Biosciences Homepage Medicare covers it under specific conditions; some commercial insurers do not.
Where Medicare Covers It
Palmetto GBA, a Medicare Administrative Contractor responsible for coverage decisions on molecular diagnostics, expanded coverage for DecisionDx-Melanoma under Local Coverage Determination L37725, effective November 22, 2020. The policy covers the test for patients with a personal history of melanoma at stage T1b and above, and certain T1a patients with documented concern about the adequacy of microstaging, provided the patient has no metastatic disease and a presumed sentinel lymph node positivity risk above 5%. Wisconsin Physicians Service Insurance Corporation aligned its coverage with Palmetto on the same effective date.8GenomeWeb. Castle Bio Receives Expanded Medicare Coverage for Melanoma Test
Where Private Insurers Have Refused
Blue Cross Blue Shield of Michigan has repeatedly denied coverage, classifying the test as “experimental or investigational” under its medical policy on gene expression profiling for cutaneous melanoma. At least two cases reached the Michigan Department of Insurance and Financial Services for external review, and in both the state upheld the insurer.
In a 2022 case, a patient who received the test in May 2021 was billed $8,500. BCBSM denied the claim, and an independent review organization agreed the test was experimental based on NCCN guidelines. The state insurance director upheld the denial on June 22, 2022.9Michigan DIFS. External Review Decision, File 206378-001 A nearly identical case played out in 2025. A patient tested in December 2024 was again billed $8,500, BCBSM denied on the same grounds, and the state director upheld the denial on August 26, 2025. The petitioner cited the Palmetto Medicare LCD as evidence the test was not experimental, but the independent reviewer and the state found this unpersuasive for the specific commercial plan at issue.10Michigan DIFS. External Review Decision, File 238159-001
Castle Biosciences has stated in its SEC filings that patients “do not enter into direct agreements” committing them to pay for tests that insurers decline to reimburse, and that when no positive coverage determination exists, the company treats unpaid amounts as “implicit price concessions” rather than pursuing collection from patients. For Medicare claims lacking an LCD, the company uses an appeals process rather than billing patients directly.11Castle Biosciences. Q2 2023 Quarterly Report
Not the Same as Castle Creek Biosciences
A separate company called Castle Creek Biosciences, Inc., a Delaware corporation based in Pennsylvania, is unrelated to Castle Biosciences, Inc. despite the similar name. Castle Creek has appeared in Delaware Court of Chancery litigation involving a merger dispute with Cytotheryx, Inc., but that case has no connection to the Friendswood, Texas diagnostics company discussed here.12Delaware Courts. Cytotheryx, Inc. v. Castle Creek Biosciences, Inc. If you are searching for a Castle Biosciences lawsuit and see results about Castle Creek, those are different proceedings.