Laboratory Corp. pays for unnecessary billing $187 million settlement follows federal charges over unneeded blood tests

November 22, 1996|By NEW YORK TIMES NEWS SERVICE

Laboratory Corp. of America has agreed to pay $187 million in civil and criminal penalties to settle federal charges that it billed Medicare and other programs for unnecessary blood tests, federal officials said yesterday.

The settlement was the biggest in a half-dozen cases resulting from a four-year investigation that involved most of the major clinical laboratories. The settlements totaled $479 million, including yesterday's agreement.

Laboratory Corp. will pay $182 million to settle civil lawsuits involving unnecessary billing to Medicare, to Medicaid and to several other public agencies. Medicare is the federal health care program for the elderly and disabled, and Medicaid is the program for low-income people.

A regional unit of Laboratory Corp. in San Diego, Allied Clinical Laboratories, agreed to plead guilty and pay a $5 million fine on one criminal count of defrauding Medicare.

June Gibbs Brown, the inspector general of the Department of Health and Human Services, barred the Allied Clinical unit from further dealings with Medicare and Medicaid, effectively ending Allied Clinical's ability to function. But other units of Laboratory Corp. will continue to operate in California.

Roche Biomedical Labs, a unit of Laboratory Corp., also agreed to follow a set of business rules required by the inspector general's office.

The settlement yesterday was the third largest involving health care fraud, after a $379 million agreement by National Medical Enterprises -- now part of the Tenet Healthcare -- in 1994, and $255 million paid by First American Health Care of Georgia Inc. last month.

The settlement was announced by the Department of Health and Human Services, the Justice Department, the FBI and U.S. attorneys in New York, California and North Carolina.

Laboratory Corp. is based in Burlington, N.C.

Federal officials said they expect to announce additional settlements in two related laboratory cases.

In one, SmithKline Beecham PLC has announced that it has set aside about $300 million to settle Medicaid charges.

Corning Clinical Laboratories, which agreed last month to pay $119 million to settle a similar Medicare fraud case, is also expected to agree to a further settlement, officials said.

Pub Date: 11/22/96

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