California Atty. Gen. Jerry Brown filed suit against several medical labs in Southern California, accusing the private companies of systematically defrauding the Medi-Cal program of hundreds of millions of dollars by overcharging the state by as much as 400 percent for laboratory tests.
Brown on Friday named the companies, some of which are based outside of Los Angeles County but have significant operations here.
The defendants include laboratory testing giant Quest Diagnostics, Inc. which is based in Madison, NJ. and has a Valencia affiliate called Specialty Laboratories Inc. Also named are two Burbank companies, Health Line Clinical Laboratories Inc., now known as Taurus West, Inc., and Physicians Immunodiagnostic Laboratory Inc.
Other defendants are Whitefield Medical Laboratory Inc. in Pomona and Seacliff Diagnostics Medical Group in Monterey Park. An Orange County company, Westcliff Medical Laboratories in Santa Ana also is charged, as well as an out-of-state company, Laboratory Corporation of America in Burlington, NC.
The suit aims to recover at least $100 million worth of the excessive charges paid by Medi-Cal, which provides health services to the poor. The attorney general’s office launched its own investigation three years ago after a competing Northern California medical lab filed a private false-claims action under seal.
Hunter Laboratories in Campbell determined it could not compete in a significant segment of the marketplace where many of the major players were offering referring doctors, hospitals, and clinics far lower rates than they were charging Medi-Cal.
“We then had a choice — either join the other labs in violating the law or be unable to compete for business,” said Chief Executive Chris Riedel in a statement. “We choose to suffer the financial consequence, and follow the law.”
In one instance, Quest was charging Medi-Cal $8.59 to perform a complete blood count test, while it charged some of its other customers $1.43 for the same test.
The whistleblower suit potentially enables Hunter to receive a share of the amount recovered if requirements of the state’s “qui tam” laws are met.
