A long trail of whistleblower lawsuits against the country's two largest medical laboratory services companies may come to an end in Virginia.
Lawyers for Quest Diagnostics are asking a Virginia judge to dismiss a complaint alleging the company billed Medicaid at unfairly high rates.
The California-based Hunter Laboratories, filing a complaint under a Virginia law allowing private parties to sue on behalf of the commonwealth, accused Quest Diagnostics and the other giant, Laboratory Corporation of America, of violating the Virginia Fraud Against Taxpayers Act in submitting Medicaid charges higher than the "lowest rates" charged to other payers, physicians, clinics and group purchasers.
In one example, the complaint alleged, the two labs would bill Medicaid more than $10 for a providing an automated hemogram, while charging others as low as $1.42. Lawyers for Hunter Laboratories alleged that the labs were also offering discounts to providers as a way to encourage referrals of Medicaid patients, in violation of the federal Anti-Kickback Statute.
For laboratory services, Virginia Medicaid requires either what the provider charges the general public or what the Department of Medical Assistance Services charges in a fee schedule.
Lawyers for Quest said in their motion to dimiss the whistleblower complaint that clinical laboratory companies in Virginia are "not required to give Medicaid negotiated discounts to particular customers, but rather its charge to the general public--meaning its list price to cash-paying patients."
Chris Riedel, the founder and CEO of Hunter Laboratories, mostly spearheaded the lawsuit in Virginia, along with other litigation targeting large lab companies, including one that led to a $241 million Medi-Cal settlement with Quest.
Hunter Laboratories was Riedel's fourth healthcare company, after previous ventures that included developing testing for antibiotic susceptibility and bacterial identification--and the company was recently acquired in August by Bio-Reference Laboratories, a mid-size New Jersey-based company trying to compete with large labs in the giant California market.