LOS ANGELES--(BUSINESS WIRE)-- In a move that ends a long-running dispute over how Medi-Cal instructs laboratories to charge for tests, three privately owned laboratory defendants reached an agreement today to resolve their respective cases with the California Attorney General.
A whistleblower action that originated in 2005 against two large publicly traded laboratories initiated the dispute. The private laboratories did not learn of the existence of the sealed whistleblower lawsuit until shortly before it became public in 2008, and long after the publicly traded laboratories learned of the case and its allegations.
“Part of the complexity of this case was Medi-Cal’s seeming acceptance, for years, of different price structures for different purchasers,” said Dawn Brewer of the Law Offices of Dawn Brewer, co-counsel for the three laboratories. “These three smaller laboratories asserted that Medi-Cal had known of the differences in charges for which they regularly reimbursed the labs, and rejected Medi-Cal’s claim that it provided clear guidance on reimbursement practices.”
To resolve the disputed claims, Physicians Immunodiagnostic Laboratory, Inc. will pay the State $600,000, Primex Clinical Laboratories, Inc. will pay $750,000 and Whitefield Medical Laboratory, Inc. will pay $400,000. In the related cases, publicly traded Quest Labs agreed to pay a record-setting $241 million settlement and Laboratory Corporation of America (LabCorp) agreed to pay a $49.5 million settlement. Both Quest and LabCorp agreed to extensive reporting requirements for claims in future years, but no such reporting is required of the private laboratories. With the announcement of the private laboratories’ settlement, the California Attorney General’s active cases related to laboratory charges have concluded.
“These laboratories chose to defend their work and reputations, and are pleased to have the litigation behind them,” added Brewer. “While the cases have concluded, all laboratories need further guidance from Medi-Cal on how to charge the program, given the various ways laboratory tests are paid for in the health care market.”
For attribution to Alfred Ramzi, CEO of Physicians Immunodiagnostic Laboratory, Inc. (PIL):
“The 130 employees of PIL feel vindicated by today’s agreement, and we are recommitting ourselves to maintaining the highest standard of conduct for our industry. We hope the conclusion of the case will now lead to a dialogue with regulators about what is needed to ensure a level playing field and open competition among laboratories of all sizes.”
For attribution to Erik Avaniss-Aghajani, Primex Clinical Laboratories, Inc.:
“This resolution to the costly and disruptive detour from running our business demonstrates that despite the competitive disadvantages of being named as a defendant in the case, we defended our practices as fair and in compliance with the dozens if not hundreds of billing instructions that govern our industry.”
For attribution to Jatin Laxpati, President of Whitefield Medical Laboratory, Inc.:
“Our clients – and our competitors for that matter – understood that we vehemently denied that we had improperly charged Medi-Cal for testing. After reaching this resolution, we are anxious to return our focus to service to our loyal and valued clients.”
Law Offices of Dawn Brewer
Dawn Brewer, Esq.
KEYWORDS: United States North America California
INDUSTRY KEYWORDS: Health Biotechnology Pharmaceutical Other Health General Health Managed Care