Calif. AG, Labcorp settle whistleblower suit for $49.5M

John O'Brien Aug. 31, 2011, 9:00am


SAN FRANCISCO (Legal Newsline) - California Attorney General Kamala Harris and Laboratory Corporation of America have reached a $49.5 settlement to resolve allegations of overcharges to the state's Medi-Cal program.

The agreement, announced Tuesday, brings the total amount recovered by the Attorney General's Office in lab test pricing cases to $298 million. Labcorp is the state's second-largest provider of medical laboratory testing.

California's involvement in the case came after a whistleblower filed suit in 2005. The suit alleged Labcorp and others overcharged the Medi-Cal program for more than 15 years and gave kickbacks in the form of discounted or free testing doctor's hospitals and clinics.

Those allegedly receiving kickbacks had referred Medi-Cal patients and other business to the labs.

"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," Harris said. "In this time of difficult public budgets, we will make it a high priority to track down those who engage in excessive charges, false claims or illegal kickbacks of Medi-Cal funds."

Labcorp allegedly charged Medi-Cal more than five times as much as it charged customers for certain tests. Chris Riedel was the whistleblower in the case. He said his company Hunter Laboratories could not compete in a marketplace where other labs were offering lower rates.

Harris reached a $241 million settlement with Quest Diagnostics in May to resolve the same allegations.

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