Hunter Labs. LLC v. Quest Diagnostics Inc., case No. 1:13-cv-01129 (E.D. Va.): In a recently unsealed qui tam lawsuit, Hunter Laboratories (now part of Bioreference Laboratories) alleges that Quest Diagnostics Inc. (Quest) and Laboratory Corp. of America Holdings (LabCorp) violated the Virginia Fraud Against Taxpayers Act by billing the state Medicaid program at rates above the maximum allowed under Virginia regulations. The relator also alleges that the defendants violated the federal Anti-Kickback Statute (AKS) by offering illegal discounts on rates for private-pay patients in order to “pull through” Medicaid business. Hunter Laboratories originally brought the complaint in Virginia state court in 2007 but the case has been removed to the District Court for the Eastern District of Virginia because the relator’s allegations that defendants violated the AKS raise questions of federal law.
In 2005, Hunter Laboratories filed a similar lawsuit against Quest and LabCorp under the California False Claims Act, alleging that the two laboratories failed to charge Medi-Cal, the state Medicaid program, the same price charged to “other purchasers of comparable services provided in comparable circumstances” as required by state law. Hunter also alleged that Quest and LabCorp violated state law by giving illegal kickbacks in the form of discounted or free testing to doctors, hospitals, and clinics that referred Medi-Cal patients and other business to the laboratories. California intervened in the case in 2009. In 2011, Quest settled the lawsuit for $241 million and LabCorp settled for $49.5 million.