Bloomberg News

Laboratory Corporation Will Pay $49.5 Million to Settle Suit

August 30, 2011

(Adds California Attorney General in second paragraph.)

Aug. 30 (Bloomberg) -- Laboratory Corporation of America will pay $49.5 million to settle a lawsuit filed by California claiming it illegally overcharged Medi-Cal, the state’s medical program for the poor.

The complaint was filed under court seal in 2005 by a whistleblower and referred to the California Attorney General’s office, according to an e-mailed statement issued by state Attorney General Kamala Harris.

The suit claimed 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 Medi-Cal patients and other business to the company’s labs, according to the statement.

“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 the statement. “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.”

Laboratory Corporation of America, based in Burlington, North Carolina, is the second-largest provider of medical laboratory testing for California, according to the statement. Similar cases are pending against three other defendants, according to Harris.

In May, Harris announced a $241 million settlement with Quest Diagnostics Inc., the biggest U.S. operator of medical laboratories, over the same claims.

Laboratory Corporation of America spokesman Stephen Anderson and spokeswoman Donna Schuetz didn’t immediately return calls and e-mails seeking comment after regular business hours.

--Editors: Peter Blumberg, Mary Romano

To contact the reporter on this story: Joel Rosenblatt in San Francisco at jrosenblatt@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net


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