California Attorney General Jerry Brown joined a whistle-blower lawsuit alleging that the state’s Medicaid program was systematically overcharged hundreds of millions of dollars by seven clinical laboratories, including major national players Quest Diagnostics and Laboratory Corporation of America.
The lawsuit, filed under California’s False Claims Act by competitor Hunter Laboratories, was unsealed last week. Hunter and now Brown allege that Medi-Cal over the past 15 years was charged as much as six times as much as parties such as physicians, group purchasing organizations and hospitals paid for the same services. The deep discounts extended to everyone else amounted to kickbacks for steering Medi-Cal patients to those labs, the lawsuit contends.
California law prohibits providers from charging the state more than they charge other payers for the same services, according to the attorney general’s office. Among examples offered of the alleged price gouging was a common blood test that Quest billed Medi-Cal at $8.59, compared with $1.43 for other customers. “We believe that our services were priced appropriately,” Quest spokeswoman Wendy Bost wrote in an e-mail. “We intend to vigorously defend ourselves in the case.”
(For more on attorneys general delving into healthcare, please see “When attorneys general attack.”)
