The United States Department of Justice (DOJ) announced that Laboratory Corporation of America (LabCorp) will pay $2.1 million to resolve allegations that the company violated the federal False Claims Act. According to the DOJ, LabCorp overbilled the United States Department of Defense (DOD) for genetic tests performed by GeneDx, LLC, a third party reference laboratory used by LabCorp to perform genetic tests for military members.
The claim was initially brought under the qui tam provisions of the False Claims Act by a former LabCorp employee, who alleged that LabCorp and the DOD entered into a contract where LabCorp would perform lab testing at all DOD Military Treatment Facilities throughout the world. However, certain specialized tests – including genetic tests involving fetuses and parents – were performed by GeneDx as a reference lab for LabCorp. GeneDx would invoice LabCorp for the genetic tests and LabCorp would invoice the DOD.
According to the settlement agreement, from December 1, 2013, through June 30, 2021, LabCorp allegedly double and/or triple billed the DOD for genetic tests performed by GeneDx and overcharged the DOD for genetic tests performed by GeneDx. LabCorp also allegedly inappropriately billed DOD for tests performed by GeneDx when LabCorp was later unable to locate evidence of one of the following: (1) a DOD requisition form; (2) a GeneDx test result; and/or (3) a corresponding Dx invoice. There was allegedly $210,959 in overcharges on 38 tests, including $113,525.50 for 21 tests billed between March 2016 and January 2017.
The lawsuit also alleged that staff at Walter Reed National Military Medical Center questioned LabCorp in 2017 about charges for a certain screening for genetic abnormalities in children and fetuses. That test typically runs two or three analyses on DNA samples from a child or fetus along with one or both biological parents. LabCorp should have only paid GeneDx for one test and DOD should only be charged for the single test plus a small fixed fee. However, staff at Walter Reed found that LabCorp was charging for parental analyses in addition to the analyses on the child or fetus samples. When confronted, LabCorp said it was appropriately billing for the tests under the agreement.
The whistleblower then asked for confirmation about GeneDx’s billing practices, and it was then that LabCorp realized it had been charging the DOD two to three times more than the agreed amount. After that finding, LabCorp did not repay the DOD for those overbillings, only offering a credit for those tests and noting it would correct the issue going forward.
The whistleblower will receive $357,000 as part of the settlement.
As is often the case, LabCorp did not admit any liability as part of the settlement, and as such, claims resolved by this settlement agreement are allegations only.
“Federal contractors are required to bill for costs actually incurred. The U.S. Attorney’s Office and our partners are committed to protecting taxpayer dollars and ensuring integrity and compliance with government contracts,” said U.S. Attorney Erek L. Barron.