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28 Jul 13 Labcorp Scamming Federal Government

LabCorp ScamAndrew Baker, the former CEO of Unilab and current CEO of Huntington Life Sciences, has written an article for The Huffington Post in which he asks the federal government to stop LabCorp and another lab company from continuing to scam the Medicare and Medicaid programs of billions of dollars.

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Mr. Baker had previously filed a whistleblower lawsuit against LabCorp in 2007 alleging that LabCorp violated the federal False Claims Act and Anti-Kickback Statutes.  Those case is still in court.

In the article he estimates that LabCorp and the other lab have cost taxpayers $15 billion since 1996 in the form of false claims stemming from illegal kickbacks to Aetna, Cigna, United Healthcare and Blue Cross.

The claims are that Labcorp is breaking federal laws by deeply discounting lab fees to private insurance companies, sometimes charging them for laboratory tests even below their costs. In exchange, the insurance companies pressure doctors in their networks to send all of their patients’ lab work, including Medicare and Medicaid patients, to LabCorp.

He claims that Labcorp funds the kickbacks, in the form of lower lab fees for private insurance companies, by charging Medicare and Medicaid patients the highest possible fee instead of offering them the lowest charged price, and by pressuring doctors to send all of their lab work exclusively to Labcorp. Other categories in Medicaid and Medicare require that the government be charged the lowest charged fees by a provider.

Mr. Baker also mentions LabCorp’s $50 million settlement with the state of California for overcharging California’s Medicaid program and for providing kickbacks to physicians for referrals.

As a result of his article, pressure is increasing for government intervention in laboratory pricing for government programs.  He advocates for clarification of the intent of current federal law that would require laboratories to charge Medicare and Medicaid their “best price”, just as California has already done.  This would require that Laboratory Corporation of America can only charge Medicare and Medicaid the lowest price they charge private insurance companies or HMOs. Which in turn means a massive hit to Labcorp’s bottom line. It would also open up the market to smaller labs which don’t have the multi-tier, lower than cost pricing intended to put them out of business. Such a hit to Labcorp’s financials would tumble their stock (NYSE: LH).

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26 Jul 13 LabCorp Shareholders Disappointed

LabCorp Shareholders are DisappointedLabCorp shareholders were disappointed at the lower than expected earnings that Laboratory Corporation of America, also known as LabCorp, revealed. Medical laboratory operator Laboratory Corp. of America Holdings said Friday that its net income slipped in the second quarter and lowered its guidance for the full year. This was a major disappointment to analysts and shareholders alike, but not to the patients who have received lackluster service at LabCorp facilities.

Its revenue rose 3 percent but the company said the advance was constrained by reduced Medicare payments, steep federal budget cuts in April, and delays and denials of coverage by some health care payers after new payment codes were introduced. Its shares slipped by midday.

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LabCorp said its net income fell to $151.9 million, or $1.62 per share, in the second quarter ended June 30, down from $153.3 million, or $1.56 per share, a year earlier. Revenue rose 3 percent to $1.47 billion from $1.42 billion.

LabCorp said testing volumes rose 5 percent during the quarter, but revenue per request for testing fell 1.8 percent. It said testing for drugs of abuse increased. The company expects to earn between $6.90 and $7.10 per share for the year, down from $6.85 to $7.15 per share.

LabCorp said earlier this year that reduced Medicare payments will cut its annual net income by about 35 cents per share, and it maintained that view on Friday. Analysts are forecasting earnings of $7.08 per share.

The company still expects its annual revenue to grow 2 to 3 percent, which implies a total of $5.78 billion to $5.84 billion. Analysts project $5.79 billion in revenue on average. Shares of LabCorp (NYSE: LH) lost 74 cents on the announcement. As of today, July 26th, shares of LabCorp are trading at around $98 per share.

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26 Mar 10 LabCorp Stock Downgraded and Shares Drop

LabCorp (Laboratory Croporation of America) shares of stock fell more than 2% on Tuesday, March 23rd after a Deutsche Bank analyst downgraded the company’s stock (NYSE: LH) from “buy” to “hold.” LabCorp is the second largest US commercial reference lab. One of the key factors cited for this change was lower than expected First Quarter volume. Physician office visits have been below the trend line for the first two months of 2010 and physician offices are responsible for a significant percentage of LabCorp’s test volume. It is estimated that for every 1% increase in the unemployment rate, 2.5 million Americans lose their health care benefits.

 Other factors influencing the recommendation were weather, intensifying competition and possible pricing pressures from public payors. The analysts reported that “Downside risks: competition, Medicare / Medicaid / VA cuts, weak demand. Upside risks: accretive M&A and share buyback, higher volume growth.”

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08 Mar 10 LabCorp Under Investigating by the U.S. Department of Labor

Department Of Labor Compalint Against LabCorpThe United States Department of Labor is investigating Labcorp for not being in compliance with their affirmative action plan and for discriminating against certain sectors of the population. In a recent letter received by LabCorp Sucks from a former employee, the U.S. Department of Labor, Employment Standards Administration’s Office of Federal Contract Compliance Programs requested that their Jacksonville, Florida office consider the allegations made by the former employee when conducting future compliance evaluations of Laboratory Corporation of America.

If Laboratory Corporation of America (LabCorp) is found to not be in compliance and fails to correct the problems, they can be sanctioned and could even be restricted from participating in the Medicaid and Medicare program, two major income sources for the Laboratory company. LabCorp can also be prohibited from participating in other government programs, including the CHAMPUS program (The Civilian Health and Medical Program of the Uniformed Services) that provides laboratory services to government employees, and to Veterans Administration program beneficiaries. LabCorp currently contracts with all these government programs to provide reference laboratory services to program participants. Since many HMOs that serve the beneficiaries of these federal programs also contract with LabCorp, the HMOs would also be restricted from using LabCorp. The loss in business could be in the hundreds of millions and could be catastrophic to LabCorp stock (NYSE: LH).

LabCorp’s discrimination problems have been well known to company insiders. The company has various lawsuits pending and has had to settle others by paying out millions. In a recent Florida case, LabCorp even had to fire the law firm representing them after accusations of obstruction of justice by the firm.

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16 Feb 10 LabCorp Reports Profits But Its Future Remains Cloudy

Laboratory Corporation of America (LabCorp – New York Stock Exchange Symbol LH) recently reported an increase in fourth-quarter net earnings to $142.7 million, as compared to $118.1 million for the 4th quarter of 2008. The increase in earning were due partly to a gain of $21.5 million from resolving state tax issues and realizing foreign tax credits.

LabCorp’s total revenues for the fourth quarter rose to $1.17 billion, up from $1.12 billion the year before. For the full year, the company had profits of $543.3 million, up from earnings of $464.5 million in 2008. The increase also includes all the income from the labs that Labcorp has acquired.

LabCorp CEO Dave KingLabcorp also announced that it will be spending $250 Million to buy back shares of their own stock. Labcorp’s Chairman and CEO David King said “ We remain optimistic about the growth opportunities that lie ahead for us in 2010, and we are well positioned to capitalize on them.”  I highlight the word lie because while he was making the statement, he was filing with the Securities and Exchange Commission that he had just sold shares of LabCorp stock and pocketed over $171,960 in profits. You would think that when the head of a company announces positive results and claims to be “optimistic about the growth opportunities” he would be buying stock, not selling it. But then he owns lots of LabCorp stock and could have sold for other reasons.

US Department of Labor Investigation of LabCorpOne thing that LabCorp CEO David P. King didn’t boast about is that of a rumored investigation of LabCorp by the US Department of Labor, Employment Standards Administration, Office of Federal Contract Compliance Program. According to posts in CafePharma.com, LabCorp’s Florida operations are in trouble. They had to settle an employment lawsuit at a rumored cost of about $2.7 Million. In addition, they have a pending Federal lawsuit from a former employee that has not gone too well for them. With allegations of witness tampering and obstruction of justice, LabCorp has had to fire the law firm that was handling the case. The posts include the following:

OFCCP would like to hear from those who have been discriminated against based on a protected characteristic. (personal info removed) A formal recommendation has been made for an investigation of LCA Florida. Those who aren’t afraid to get their hands dirty, write:

US Department of Labor
Employment Standards Administration
Office of Federal Contract Compliance Program
Charles E Bennett Federal Building
400 West Bay Street
Room 939
Jacksonville, Florida 32202

or call:

(904) 351-0551

SUBJECT: LABCORP CONDUCT IN FLORIDA.

 All correspondence is confidential. 

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21 Nov 09 LabCorp Getting More Government Money

Just last month, LabCorp reported that they made $131.4 Million dollars in profit for the latest quarter, on revenue of $1.19 Billion. That was a 17% increase in profits as compared to the same quarter last year. Obviously LabCorp stock (NYSE: LH) went up to a new yearly high and all the senior executives high-fived each other.

North Carolina Property of LabcorpWell that was last month. Just a few days ago Labcorp went to the state and local governments in North Carolina for a handout of taxpayer money.  LabCorp wants to consolidate its billing operations and if it selects Greensboro as the location of the new facility, it would receive nearly $900,000 in taxpayer money. That’s free money from the taxpayers that will never be repaid.

The Burlington-based company is reportedly considering moving its billing operations from 24 sites across the country to one location in Greensboro or in Danville, Virgina. On Thursday, Guilford County commissioners approved giving the company $248,791 of tax payers money. The city of Greensboro also is offering $373,000. North Carolina would grant Labcorp $275,000 of taxpayer money. That’s a total payoff of $896,791 of taxpayer’s money. The excuse the elected officials are using is North Carolina’s unemployment rate, which is up to 11% and above the national average. This is the ninth straight month the state’s unemployment rate has reached double digits. So what is the government doing handing out free money to a company that just made over $131 Million in the last three months?

So as I see it, a cash strapped state, county and city have decided to payoff LabCorp, a company that made over $131 Million in profits over the last three months, to move their billing operations to their region. It is obvious that LabCorp threatened to move the operation to Virginia in order to get the cash from the taxpayers of North Carolina. I would like to know how many of the elected officials involved in the decision have, or will receive political contributions from LabCorp? Who knows what LabCorp will ask for next? How about adding the following motto to the state’s seal “Property of LabCorp.”

Location of the Greensboro-Winston-Salem-High Point CSA:      Greensboro     Winston-Salem     Thomasville-Lexington     Burlington     Mount Airy

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20 Sep 09 LabCorp Downgraded by Financial Analysts

Financial analysts in Wall Street have downgraded LabCorp (LH on the New York Stock Exchange), citing a slow down of testing volume growth and lower prices for their services. The analysts also expect a cut in Medicare payment rates and potentially weaker prices from health insurers. In addition, health care reform could lead to further rate cuts and eliminate the obscene profits that LabCorp makes on some of their niche lab tests.

Will the N1H1 Swine Flu help offset these factors? The answer is a flat out no. LabCorp won’t get much of a boost from a swine flu outbreak because flu testing is only a small part of its business.

Even though LabCorp is buying back their own shares, it may not be enough to maintain the share prices at their current levels. Laboratory Corp. of America announced that they will buy back up to $250 million of common stock under a repurchase plan approved by its directors. LabCorp purchased a total of $500 million worth of shares under its previous stock buy-back plan. About $95 million of those repurchases have taken place since the end of June.

With employee dissatisfaction, pending lawsuits and ongoing management problems, it looks like shares of Laboratory Corporation of America are heading down quickly. Some of the company’s insiders sold the shares ahead of the downgrades.

On 09/08/09 LANE WENDY E, a Director, sold 4,116 shares for $68.70 a share.

On 09/02/09 LANE WENDY E, sold 2,604 shares at $68.78  a share.

On 08/17/09 HARDISON DONALD M, the company’s Chief Operating Officer, sold 854 shares at $69.50 per share.

According to Yahoo Finance, during the past 6 months there have been no insider purchases and 5 insider sales. A total of 12,481 shares have been sold by insiders and a net 12,258,100 shares have been sold by institutions, after taking into account purchases by institutions. It seems that some of those who really know what is going on are selling.

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26 Jul 09 LabCorp Claims to be Making Lots of Money for Stock Holders

LabCorp Stock Making MoneyLabCorp (Laboratory Corporation of America) said it earned $136.4 million, or $1.24 per share, during the second quarter of 2009, up from $104.2 million, or 92 cents per share, during the same period in 2008.

Excluding restructuring charges, earnings per share were $1.30, compared to $1.24 last year. That’s an almost 5% increase in earnings.

Laboratory Corporation of America, whose NYSE symbol is LH, said its testing volumes rose 2.4 percent from the second quarter of last year, and revenues were $1.19 billion, an increase of 3.6 percent from the same period a year ago.

With about $1.2 billing in revenue for the quarter, LabCorp is making lots of money for their shareholders. But is it at the expense of patients? Is it by sacrificing quality of care? According to patient complaints on this site, it’s a very real possibility. Has Laboratory Corporation of America forgotten that it’s the patients that matter, and not just the insurance companies and third party payers?

When a company grows quickly, it tends to lose its competitive advantage by losing some control over its operation. Incompetent managers take control and run matters their own way, without regards to core company values. In most cases the senior managers see this happening and take immediate action to eliminate the bad apples. The decisions are made by senior managers who have the foresight to see their company succeed in the long-term, not just the short-term. In my personal opinion, LabCorp senior managers have not taken the necessary actions needed to get rid of those lower level managers who will eventually lead to the demise of such a fast growing company. It’s a common story in the health care industry. Remember Integrated Health Services, Coastal Physician Group and Coach? They all had big short-term growth but in the end did not succeed.

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09 Oct 08 U.S. says LabCorp Ovarian Cancer Test Sales are Illegal

The United States Food and Drug Administration issued a letter to LabCorp warning them that they are in violation of the law. LabCorp doing illegal things brings up their checkered past, when they were charged with fraud in the LabScam investigation.

The FDA warning letter and possible criminal and civil action against LabCorp could be the beginning of the end for Laboratory Corporation of America. I say this because as one government agency moves against them, there are possibly other government agencies that might step up to further investigate other allegations against the company. It’s about time that this regulatory oversight process start. For too long LabCorp has focused on the buck as opposed to the law and the required quality standards. In my own opinion, it is a company that is out of control.

Here’s the FDA story:

WASHINGTON, Oct 8 (Reuters) – Laboratory Corp of America (LH.N: Quote, Profile, Research, Stock Buzz) is violating the law by selling an ovarian cancer screening test without regulatory approval, U.S. health officials said on Wednesday.

The OvaSure test does not fall in a category that can be sold without prior clearance from the agency, the Food and Drug Administration said.

“Because you do not have marketing clearance or approval from the FDA, marketing OvaSure is in violation of the law,” the agency said in a letter dated Sept. 29.

The agency told the company to “take prompt action to correct these violations.”

LabCorp spokesman Eric Lindblom said the company was “disappointed” by the letter.

“We are currently in discussions with the FDA over the next steps and of course we share the FDA’s determination to assure patients are protected,” he said.

The company started selling the blood test in June, saying it could detect early-stage ovarian cancer in high-risk women.

The FDA letter was posted on the FDA website. You can read the full letter by clicking here.

LabCorp shares (NYSE: LH) fell nearly 1.8 percent today to close at $60.63 on the New York Stock Exchange.

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24 Jul 08 LabCorp’s stock hits a new 52 week low

LabCorp’s stock hit a new 52-week low today after posting less than expected sales and profits. Even LabCorp supporting analysts downgraded the stock. Here’s one headline from MarketWatch “S&P DOWNGRADES OPINION ON SHARES OF LABCORP OF AMERICA…” Here’s another one “Laboratory Corp. Of America Holdings’ second-quarter net income fell 19% on restructuring costs as the lab-services provider lowered its 2008 outlook.”

At one point during the day LH stock was down almost $7, losing over 10% of the company’s market value. Laboratory Corporation of America’s stock trades on the New York Stock Exchange under the symbol LH.

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