A federal judge has ruled that the California comptroller wasn't authorized to suspend nearly $1 million in Medicaid payments to two clinical laboratories after a state audit found the labs were overpaid.
The April 9 ruling means Health Line Clinical Laboratory and RCJ Medical Services, both based in Los Angeles, are entitled to an administrative hearing on the suspension and at least a temporary revocation of it.
The companies filed a consolidated complaint last month in U.S. District Court in Los Angeles. Their separate challenges had been rejected by the state superior court earlier this year.
California suspended payments to RCJ in January 1997. The company since has laid off employees and borrowed money to continue operating. Health Line, which has not received Medicaid payments since February, has sold a laboratory and plans to lay off 200 employees.
The labs also are being investigated by the FBI.
It isn't known whether the state will appeal the decision.