Washington, DC—March 27, 2023—Laboratory Corporation of America (Labcorp), a global healthcare company that provides clinical lab services, has agreed to pay a total of $2.1 million to the federal government to resolve allegations it violated the federal False Claims Act. The allegations were initially brought in a whistleblower lawsuit filed by Phillips and Cohen LLP for failure to return overpayments to the government. The Department of Justice joined the “qui tam” (whistleblower) lawsuit after investigating the allegations of false claims.
According to the complaint, Labcorp had a multi-year, worldwide contract with the Department of Defense (DoD) to provide reference-testing services at military treatment facilities across the U.S. and abroad. Labcorp refers tests it does not perform itself to third-party providers. Under Labcorp’s DoD contract, when the company refers a test to another laboratory, Labcorp pays the third party and then charges DoD the cost plus a small fixed fee.
In 2017, Walter Reed National Military Medical Center questioned Labcorp about charges for a costly test Labcorp referred to a third party provider. The test identifies genetic abnormalities in children and fetuses by analyzing DNA samples from the child or fetus and each available biological parent. Although the third-party lab runs two or three analyses, the provider charges only for the report generated for the child or fetus. Labcorp only pays the provider one global charge for the complete genetic battery of all tested family members.
The complaint alleges that Labcorp mistakenly double and triple-billed DoD for the genetic tests performed by GeneDx under the DoD contracts by charging DoD the full global charge for each person tested. Upon learning of its error from Walter Reed and the whistleblower, Labcorp only offered to refund Walter Reed the overcharges for the most recently run double or triple-billed tests. The whistleblower contends she was terminated by Labcorp after she expressed to her manager that, having learned of its costly mistake, Labcorp had a duty to properly bill DoD under its contract and to repay all overcharges that had resulted from the full pattern of billing errors that Labcorp learned had occurred. A few days after she protested, she was fired.
“Companies that do business with the government have a responsibility to be a good steward of taxpayer dollars,” said Peter Chatfield, a whistleblower attorney and partner at Phillips & Cohen. “That includes refunding material overcharges that initially may have resulted from an honest mistake. Our client was steadfast in making sure that Labcorp searched out and paid back all of the overcharges that it initially billed. Her concern to do right by her customers ended her long, successful career with Labcorp and made it impossible for her to find substitute work.”
“Labcorp double and triple billed the Department of Defense and when that overbilling practice came to light, they balked at paying most of the money back,” said Donna Hecker-Gross, the whistleblower and former employee at Labcorp. “I felt it was important to come forward and report the abuse of taxpayer dollars.”
Hecker-Gross’ attorneys thanked Assistant U.S. Attorneys Tom Corcoran and Sarah Marquardt from the District of Maryland for their diligent work on this case.
The False Claims Act allows private citizens to file “qui tam” lawsuits against companies that are defrauding the government and recover funds on the government’s behalf. Whistleblowers are provided protection against job retaliation under the False Claims Act and given rewards that range from 15% to 25% of the recovery when the government joins the case.
The complaint can be found here.
The settlement agreement can be found here.
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