Labcorp Agrees to Pay $14.5 Million for Testing Fraud

BOSTON - Laboratory Corporation of America (Labcorp), a national diagnostics testing laboratory, has agreed to pay $14.5 million to resolve allegations that it violated the False Claims Act by submitting medically unnecessary claims for urine drug testing (UDT) to Medicare for payment.

Labcorp offered clients a testing panel called "Toxassure Comprehensive," which contained both "Presumptive" and "Definitive" testing methods. Generally, Presumptive UDT detects the presence or absence of certain drug classes subject to thresholds, while Definitive UDT identifies individual substances and their concentrations, where applicable. Medicare pays a flat rate for laboratory-based Presumptive UDT, regardless of the number of drug classes tested, and Medicare pays a flat rate for 22 or more drug classes tested under the Definitive method.

As part of the settlement announced today, Labcorp admitted and accepted responsibility for the following facts.

• From Jan. 1, 2018, through Nov. 22, 2023, Labcorp routinely submitted claims to Medicare for Presumptive and Definitive UDT, some of which it submitted pursuant to a testing panel that Labcorp marketed as "ToxAssure Comprehensive."
• ToxAssure Comprehensive consisted of a preselected combination of Presumptive UDT for certain substances and direct-to-Definitive UDT (i.e., with no prior Presumptive test) for other substances.
• Labcorp ran many of these tests simultaneously for the same patient, on the same date of service, using the same urine sample, and billed Medicare with CPT code 80307 for the Presumptive UDT and HCPCS code G0483 for the Definitive UDT. In other words, Labcorp billed Medicare for both the all-inclusive Presumptive code and the highest-tier Definitive code each time it performed the ToxAssure Comprehensive panel.
• For several of the substances tested on a direct-to-Definitive basis, a Presumptive testing option existed but Labcorp performed its Definitive tests without first performing a Presumptive test to determine the necessity of Definitive testing for that substance.

The government alleges that Labcorp's conduct resulted in its billing Medicare for medically unnecessary UDT claims.

"Today's settlement reflects my Office's enduring commitment to combatting healthcare fraud and recovering taxpayer money. Labcorp's conduct resulted in Medicare payouts for unnecessary tests," said United States Attorney Leah B. Foley. "We will continue to hold accountable providers who engage in fraud, waste, and abuse."

"The government expects that any testing it pays for is medically necessary and not wasteful or structured in a way that maximizes billing opportunities for providers at the expense of the federal fisc," said Assistant Attorney General Brett A. Shumate of the Justice Department's Civil Division. "We will continue to hold providers who do otherwise accountable."

"Medicare beneficiaries and taxpayers should be able to trust that testing and billing practices are fair and appropriate," said Acting Deputy Inspector General for Investigations Miranda L. Bennett of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG). "Today's settlement makes clear that when providers put profits before patients and ignore billing rules, we will act decisively to hold them accountable"

As part of the settlement, Labcorp represented that it ceased billing the combination of CPT code 80307 and HCPCS code G0483 for UDT using the ToxAsssure Comprehensive panel. Labcorp has been credited in this settlement under the Department of Justice's guidelines for taking disclosure, cooperation and remediation into account in False Claims Act cases, Justice Manual §4-4.112.

U.S. Attorney Foley, AAG Shumate and Acting Deputy IG Bennett made today's announcement. The case was handled by Civil Chief Abraham R. George along with Senior Counsel for Health Care Fraud Augustine Ripa of the Justice Department's Civil Division. Investigative support was provided by the U.S. Department of Health and Human Services, Office of Inspector General and the Federal Bureau of Investigation