LabCorp Settles for $49.5M Medicaid Fraud Lawsuit Filed by Whistleblower Hunter Laboratories

Six years after Hunter Laboratories acted as a whistleblower to file a Medicaid Fraud Lawsuit against eight medical testing lab companies for allegedly overcharging California’s Medicaid programs and giving medical kickbacks to doctors in exchange for patient referrals, defendant LabCorp will settle the case for $49.5 million. In California ex rel. Hunter Laboratories v. Quest Diagnostics, et al, the plaintiff claims that the companies made Medi-Cal pay up to six times more for testing services than it should have so that they could subsidize the discounts that were offered to the hospitals, clinics and physicians for referrals. Other defendants named in this whistleblower lawsuit: Seacliff Diagnostics Medical Group, Specialty Laboratories Inc., Taurus West Inc., Physicians Immunodiagnostic Laboratory, Inc., Whitefield Medical Laboratory, Inc., and Unilab Corp.

In its whistleblower complaint, Hunter Laboratories claims that as a result it could not compete against these lower rates-especially as the discount prices that the larger labs offered were significantly below costs. The California testing lab contends that the by using the Medi-Cal program, which is publicly funded, to subsidize their discounts, the defendants were able to gain ownership of the bulk of the market.

Under California law, providers must bill Medi-Cal the lowest rates, while bribes, kickbacks, and rebates for referral services that Medi-Cal pays for is not allowed. According to the California Attorney General’s office, which investigated the Hunter Laboratories’ whistleblower claims, some of the defendants had engaged in Medicaid fraud for over 15 years.

Recently, defendant Quest settled the Medicaid fraud allegations against it for $241 million. To date, this is the largest recovery made under California’s False Claims Act.

Whistleblower Lawsuits
If you believe that you have grounds for filing a Whistleblower lawsuit on behalf of the federal government for fraud committed against it, you should speak with an experienced Massachusetts whistleblower law firm right away. Not only could you end up eliminating fraud committed at taxpayers’ expense, but also you may be able to receive a percentage of the recovery.

LabCorp to pay $49.5M to settle Medicaid fraud suit, Medcity News, July 21, 2011
Read the complaint (PDF)

Quest Diagnostics settles Medi-Cal whistle-blower suit, Los Angeles Times, May 20, 2011

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