A lawsuit was filed on behalf of the Federal government that claims LabCorp operated a “pull-through” scheme to force doctors covered by insurers to use LabCorp for all medical testing. The suit claims LabCorp (NYSE: LH) offered illegal discounts to doctors in exchange for referring all their patients who need laboratory testing to the company.  According to federal anti-kickback laws, it’s illegal for health care companies to directly or indirectly compensate other parties to encourage them to order any service paid for by the federal health care programs.

Under federal law, companies can’t charge or participate in the Medicare or Medicaid program if they violate federal laws. The suit claims LabCorp charged Medicaid and Medicare more than $1 billion, which is about 20% of the companies total income. If LabCorp is found guilty they will not be allowed to conduct lab tests on anyone covered by Medicaid and Medicare, which is a large portion of LabCorps testing income.

On other news, LabCorp secured a new credit line of $1 billion. What a coincidence.

When PSA levels are elevated it’s important for the doctor to find out why. The levels could be high for many reasons, from a bacterial infection to a tumor or cancer in the prostate. So when a standard blood test at my cardiologist showed high PSA levels I got concerned. The first thing I noticed is that even though the blood was drawn in my doctor’s office, it was sent to Lab Corp to be analyzed. It’s the only lab he uses so I had no choice but to use LabCorp. He immediately told me to go see a Urologist.

There’s only one Urologist that I felt comfortable with, Dr. Bejany in the University of Miami Clinic building. He is not only a friend, but one of the best Urologists in Miami, Florida.

Within a few days I was in his office with the original LabCorp test results showing elevated PSA levels. While he reviewed the results I told him that the test could have been faulty and that I am not confident in the results because it was performed by LabCorp. He said that it’s possible so he had his staff draw blood for another PSA test. I immediately noticed that his office also uses Laboratory Corporation of America for PSA tests.

The doctor wanted to rule out bacterial infections so he had me fill a cup with urine. That was also marked to be sent to LabCorp. I was then moved into an exam room where he performed a digital exam. After the physical exam he requested that I do a second urine test. From the time of the first test to the second one I had ample time to drink plenty of water. I once again filled another cup of urine and after I gave it to his nurse, she marked that one for LabCorp as well. So far so good as the tests went.

After a week I called the doctors office to see what the test results showed. The nurse on the phone was baffled and kept me on hold for a few minutes. She searched all her files but was unable to provide results. She explained that the person in the office who handled the test was out for the day and that she couldn’t find any of my results. She requested that I call the next day when she’s in the office. That was yesterday.

Today I eagerly called to get the results. As anyone with the possibility of having a life-altering disease can tell you, every day without results feels like a month. The receptionist on the phone checked my file and put me on hold. I was on hold for a few minutes when she returned and said that she was checking with someone else in the office about my results. After being on hold for another 4 minutes she answered that she was still looking for the PSA test results and once again put me on hold. Knowing the efficiency of this doctor I started to get concerned about what the results showed.

A few minutes went by and the doctor picked up the phone. He told me that the PSA blood test showed my PSA levels dropping since the first PSA test, but they were still above medically acceptable levels. I asked about the possibility of a bacterial infection versus a tumor or cancer and his response was something I was concerned about, the urine tests inexplicably showed no results. It had to happen to me AGAIN, LabCorp screwed up. LabCorp either lost or failed to process both of my urine samples.

Could it be that they intentionally threw out the samples because they know I’m the author of LabCorpSucks.com? That would take too much thinking on their part. From the way they run their operation, it would be giving them too much undeserved credit. Could it be that they just outright SUCK. That makes more sense to me. They not only lost one, but two urine samples. Talk about incompetence.

The doctor decided that it didn’t make sense to have me come in again for another urine test and wait another week. He prescribed antibiotics just in case a bacteria was causing the increased PSA levels. I was then requested to come in next month for another PSA blood test to see if the antibiotics resolved the problem. He was clearly frustrated at the LabCorp PSA test results, or should I say lack thereof. I wasn’t as I know that LabCorp sucks!

Aside from Quest Diagnostics, do you know of any national labs that I can use instead of lab corp? They’re horrible.
Thanks. Jasmine

There are many regional labs but after extensive research I discovered that due to the regulations imposed on labs under the CLIA federal law, and the proliferation of managed care, there are very few labs that can be considered “national” labs. The consolidation of the industry has lead to even more business for these two lab giants. Not surprisingly, when local laboratories expand past the regional phase, either LabCorp or Quest Diagnostics buys them.

 Depending on where you live, there are local and regional labs that offer great services and are likely to be accepted by your insurance. They usually do not have as many service centers as the two large ones and are more likely to work directly with your doctor’s office. An example is Bio-Reference Labs in New Jersey and New York, Florida Reference Labs in South Florida and other such smaller lab companies. There are also others where you can mail in your specimen and have direct access to results. One of the leaders is Direct Laboratory Services (DirectLabs). The problem with them is that while you are dealing with DirectLabs through the web but you are also dealing with LabCorp, as they will send you to LabCorp to give blood for the test. This is basically a wholesaler that has LabCorp doing all the work for them and they provide the results for you. They only accept credit card payments and do not accept insurance. While their prices are lower than going directly through LabCorp, you will experience all the frustrations of dealing with Laboratory Corporation of America locations.

LabOne was considered a formidable contender but got acquired by Quest Diagnostics. Almost on a weekly basis, you will notice national labs acquiring smaller regional ones. Another option is using a hospital based lab. The problem with hospital based alternatives is that they may charge more for the services. If you’ve had enough with the big national laboratories, check with your insurance company to see the regional labs that are part of their approved networks.

It reminds me of the old AVIS rent a car ads whose slogan was “We try harder.”

 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.”

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 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.

One 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. 

I went to LabCorp in Arlington VA last Saturday am in the middle of a snowstorm that was getting worse by the minute. All I had to do was drop off a specimen, and I informed them of that the minute I walked in. After two more interruptions by me asking why I couldn’t just drop it off, they finally took it from me – an hour after I walked in the door. So, I sat for an hour in a waiting room filled with sick people (and I am not sick), while 8 inches of snow was falling and the roads getting worse by the minute, and they couldn’t be bothered to take a plastic bag of test tubes from me. They weren’t even apologetic. I think I would have been there another hour if I hadn’t finally thrown a huge FIT at the desk.

I wrote an email complaining to them about this, but you know they won’t even respond to it. They are a terrible company.

Here’s what Joan had to say:

Labcorp original blood work returned a positive result for HTLV, Human T-Cell Leukemia Virus.  If you can imagine, I was devastated.  The last two weeks have been awful. This virus is much like HIV;  it’s sexually transmitted, and transmitted through needle sharing and blood transfusions. My doctor also communicated there was no cure. 

I could not imagine where I would have contracted such a disease, but I have been feeling weak and tired, and assumed it was true.   My family and I have been devastated.

My doctor does not trust Labcorp, but since Labcorp is the only approved lab with United Health Care, (shame on United Health Care) he ordered a second test.  In the meantime, he has sent me to numerous other MRI appointments and the like looking for tumors, all at the cost of my insurance company.  Last night, I got the results and the second test was negative for HTLV.  I am grateful that I don’t have HTLV, [if I can trust their second test]; but I wonder if there is someone else out there who does… and does not know. I question Labcorp’s  laboratory process and wonder if they got the blood mixed up. Is it possible that there is a person out there who is positive for HTLV and is unknowingly spreading this death sentence virus to others?  Labcorp is incompetent.

I agree with you… Labcorp sucks!

Joan

New York, NY

Here’s information about this dreadful disease and how devastating it is. Human T-lymphotropic virus type 1 (HTLV-I) causes adult T-cell leukemia in about 2.5% of those persons infected with the virus. The time between acquiring the infection with HTLV-1 and developing disease is thought to be 30-50 years. HTLV-1 also can cause a neurological disease called HTLV-1-associated myelopathy/tropical spastic paraparesis in about 5% of those infected. This is an illness that affects the spinal cord and white matter of the central nervous system. Manifestations include difficulty walking and weakness and stiffness of the lower extremities more than the upper extremities. Bowel and bladder control may be lost. A number of other disorders have been associated with HTLV-1 including inflammation of the joints or eyes. HTLV-I is endemic in Japan, the Caribbean, New Guinea and parts of Central Africa. Prevalence is highest in southwest Japan. It is not common in the United States.

Human T-lymphotropic virus type 2 (HTLV-II) may cause neurodegenerative disease such as myelopathy, and it may be associated with hematological malignancies but the association between the virus and these diseases is weak. The virus is endemic in Native Americans in South, Central, and North America.

Enzyme immunoassay screening of serum, with confirmation by type specific western blot, immunofluorescent assay or polymerase chain reaction can be used to determine carrier status and help in confirmation of either HTLV-I or HTLV-II disease. Specific pathological conditions must be present for disease diagnosis.

He would like to hear from you if:

1. Your insurance company processed a claim for LabCorp services, and

2. LabCorp or LCA Collections billed you for a balance higher than the patient responsibility amount shown on your insurance company’s Explanation of Benefits (EOB), and

3. You paid the balance, or any portion thereof.

You can contact Mr. John Hoevel by emailing him at lab@hoevellaw.com. All emails will be kept confidential and you may have an opportunity to recover some of those over-billings.

If you are a LabCorp employee who knows about this or any other unethical practice by LabCorp, please contact Mr. Hoevel. Your statements can be very useful in stopping unethical actions by LabCorp and you and your job will be fully protected by the law under the Whistleblower Act. You might even get a reward.

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.

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.