California’s second largest provider of medical laboratory testing has agreed to pay $49.5 million to settle a lawsuit alleging it illegally overcharged Medi-Cal and offered kickbacks to doctors who brought it business.
The NYSE-listed company (LH) has 28,000 employees and offices worldwide, including an office locally on Lyons Avenue. Based in North Carolina, its 220,000 clients include physician offices, hospitals, managed care organizations, and biotechnology and pharmaceutical companies.
The settlement stems from a 2005 whistleblower lawsuit alleging that Labcorp and other medical laboratories overcharged Medi-Cal for more than 15 years and gave illegal kickbacks in the form of discounted or free testing to doctors, hospitals and clinics that referred business to the labs.
The lawsuit alleges that Labcorp charged Medi-Cal at least five times more than it charged some other customers for certain tests. For example, Labcorp was accused of charging Medi-Cal $35.04 to test for total testosterone, while it allegedly charged another customer just $7.36 for the same test.
“Medical providers and professionals who attempt to abuse Medi-Cal are draining healthcare resources from the millions of California families and children who rely on the program,” state Attorney General Kamala Harris said in a statement.
The nearly $50 million from Labcorp brings to $298 million the amount recovered to date from companies named in the 2005 lawsuit.
The bulk of that amount is a $241 million settlement with Quest Diagnostics for the same alleged practice, which Harris announced in May.
Harris said the whistleblower in the case was Northern California rival Hunter Laboratories, which said it could not compete in a market where major medical laboratories were offering doctors, hospitals and clinics lower rates than they were charging Medi-Cal.
Harris said that once the whistleblower is paid, the state would receive $35.145 million of the $45.9 million settlement amount.
Similar cases are still pending against three other defendants, Harris said.