Whistleblower lawsuit reported by the Dark Daily

Medical Laboratory Observer, May, 2009

* Whistleblower lawsuit reported by The Dark Daily. Filed under seal in 2005, a lawsuit brought by the owner and CEO of Hunter Laboratories in California has now been joined by that state in a qui tam lawsuit that alleges seven other labs have overcharged Medi-Cal hundreds of millions of dollars since at least 1995.

According to the state's attorney general, over the past 10 years, seven labs have allegedly given deep discounts (up to and including free services) when receiving direct payments from doctors, patients, or hospitals. In exchange for these discounts, the defendant labs expected their customers to refer all their other patients to them. Those referral patients' tests were paid--sometimes at a rate six times that for referring doctors or hospitals--by an insurance company, Medicare, and Medi-Cal. According to California law, this amounts to providing an illegal kickback. The state attorney general pointed out that under this operation, labs that followed the law could not effectively compete and were sometimes forced to sell or go out of business. If this qui tam lawsuit generates a large settlement, says the March 27 article, the result might encourage federal health regulators to take a long look at how Medicare program regs address the way in which labs discount services to office-based physicians.