LabCorp (Laboratory Corporation of America Holdings) has been hit with a whistle-blower federal lawsuit alleging the laboratory services company defrauded Virginia’s Medicaid program by billing it at much higher rates than other customers, according to a recently unsealed complaint filed in federal court on September 9th.
Relators Hunter Laboratories LLC and its founder Chris Riedel contend that LabCorp made false claims for payment of Medicaid-covered laboratory tests by claiming that the fees they charged to Medicaid were no higher that the maximum allowed under Virginia regulations.
As a participating Medicaid provider, LabCorp is required to provide services to Medicaid patients at their most favorable rates, but they repeatedly defrauded Medicaid by billing the program for fees well in excess of their lowest costs, according to the complaint.
For example, LabCorp, the Relators say, provided volume-based discounts to members of the Premier Inc. purchasing collective, resulting in discounted fees that are way below what LabCorp has billed to Medicaid.
“This suit calls defendants to answer for defrauding Virginia’s taxpayers and compromising the welfare of Medicaid beneficiaries,” the Relators said.
Additionally, for some tests, rates for private customers have been discounted well below costs, but LabCorp nevertheless has an interest in keeping those rates low in order to prevent any other laboratories from gaining a piece of the market, according to the complaint.
“In other words, by using the publicly funded Medicaid program to subsidize private discounts, the larger and better established laboratories have cornered much of the market for themselves,” the complaint said.
The suit alleges violations of the Virginia Fraud Against Taxpayers Act. The Relators are seeking civil penalties and treble damages.
Representatives for LabCorp did not immediately respond to requests for comment on Wednesday.
Riedel and Hunter have won big in cases against LabCorp before. In 2011, LabCorp agreed to pay $49.5 million to settle a California lawsuit alleging it illegally overcharged Medi-Cal for laboratory tests and gave kickbacks in exchange for Medi-Cal referrals.
The suit originated with a qui tam complaint also filed in 2005 Riedel and Hunter alleging that LabCorp and others had systematically overcharged Medi-Cal over a 15-year period. In March 2009, then-California Attorney General Jerry Brown announced that the state had intervened in the suit.
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