Quest, LabCorp Accused of Fraud In Newly Unsealed Suit

A whistleblower lawsuit against the nation’s two largest freestanding laboratory businesses was unsealed in U.S. District Court in California earlier this month. The suit, filed in 2012 by former Quest Diagnostics phlebotomist Elisa Martinez, accuses both the New Jersey-based Quest and North Carolina-based LabCorp of conducting duplicate blood and urine tests for which Medicare and the state of California were billed multiple times. The lawsuit listed at least four Northern California patients who underwent blood or urine tests. It claimed extra blood was drawn from the patients and their urine samples were “split” in order to perform duplicate assays. Medicare and Medi-Cal, California’s Medicaid program, were billed twice. When Martinez asked supervisors why the practice was in place, she was told to stop asking questions and be more supportive of the lab’s practices, according to the suit. Martinez also allegedly learned from a former colleague of hers at Quest who went to work for LabCorp that that lab also engaged in similar practices, which is why it is also named as a defendant. However, the exhibits attached to the lawsuit involve only Quest. The suit accuses the labs of violating both the federal and California False Claims Act. Martinez was hired by Quest as a phlebotomist for its patient service center in Red Bluff, a remote Northern California town, in July 2009. She took family or medical leave in February 2011 and was fired in June of that year. The suit was unsealed under fairly unusual circumstances: Judge Kimberley J. Mueller denied a motion from the U.S. government for a fifth extension of time that would have kept the suit under seal until March 2015. “In this case it appears the government intends to settle the case under seal while stalling with respect to intervening,” Mueller wrote in her order to unseal the case, concluding that the government had run out of rationales for extension. Most qui tam cases are unsealed when the government chooses to join forces with the plaintiff, known as the relator. A trial date for the case has not yet been set. Both Quest and LabCorp have been accused in past lawsuits of defrauding the Medicaid program in California. In 2011, both settled cases involving allegations of kickbacks paid to doctors in California in order to receive more patient referrals and paid out more than $290 million in total. The labs have also been accused of fraudulent billing practices in civil suits filed in other parts of the country. Takeaway: Quest Diagnostics and LabCorp continue to be named in whistleblower suits alleging fraudulent billing practices.