LabCorp succeeds in keeping labor law violations class action suit in federal court


A US District Court in California has denied a motion to remand the case to state court filed by the lead plaintiff in a putative class action lawsuit that alleges LabCorp failed to pay employees for overtime and meal allowances.


Ms. Rita Varsam filed this suit on behalf of herself and “all persons who worked as non-exempt Patient Service Technicians for Defendants in California, within four years prior to the filing of this complaint until date of certification” in the Superior Court of California, County of San Diego on June 3, 2014.

She alleged eight causes of action:

  1. Violation of California Labor Code §§ 510 and 1198 (unpaid overtime)
  2. Violation of California Labor Code §§ 1194, 1197, and 1197.1 (unpaid minimum wages)
  3. Violation of California Labor Code §§ 226.7 and 512(a) (unpaid meal period premiums)
  4. Violation of California Labor Code § 226.7 (unpaid rest period premiums)
  5. Violation of California Labor Code §§ 201 and 202 (wages not timely paid upon termination)
  6. Violation of California Labor Code § 226(a) (non-complaint wage statements)
  7. Violation of California Labor Code §§ 2698, et seq. (Private Attorney General’s Act or “PAGA”)
  8. Violation of California Business & Professions Code §§ 17200, et seq. (unfair and harmful business practices)

LabCorp removed the case to federal court in November 2014 pursuant to the Class Action Fairness Act of 2005 (CAFA) due to the fact LabCorp is a citizen of Delaware and North Carolina and the plaintiff is a California citizen, the proposed class has more than 100 members, and the amount in controversy exceeds $5 million.

Ms. Varsam filed a motion to remand the case back to California court, arguing LabCorp failed to prove both the amount in controversy is greater than $5 million and that there is “minimal diversity of citizenship”.


The judge relied on the deposition of the lead plaintiff and the declarations of Daniel Lontay, an expert for LabCorp who analyzed time and pay data, and Joseph Martin, LabCorp’s Senior Human Resources Information Management Specialist, to determine the amount in controversy.  Mr. Martin apparently already had put time and pay data together for another California class action lawsuit against LabCorp, and that data overlapped with the time period at issue here.

Ms. Varsam alleges class members were “required to work for periods longer than five (5) hours without a meal period of not less than thirty (30) minutes”. Employers that violate this California labor law must pay the employee an extra hour of wages.  Mr. Lontay determined that between June 3, 2010 and April 24, 2014, there were 145,723 shifts in which a LabCorp patient service technician (PST) ate a meal after the fifth hour of the shift, the meal break was less than 30 minutes in duration, or a meal break was not recorded at all. This represented about 25% of all PST shifts greater than six hours in duration.  Given the average hourly wage of LabCorp PSTs of $17.48, the amount in controversy for this claim is at least $2.547 million.

[Read more…]

Attorneys take issue with appellate ruling on pathologist’s expert witness testimony



Attorneys Mr. David Bernstein and Mr. Nathan Schachtman recently wrote about the decision by the Eleventh Circuit Court of Appeals to reverse a lower court’s exclusion of expert testimony provided by cytopathologist Dr. Dorothy Rosenthal in Adams v. Laboratory Corporation of America.  They characterize the Eleventh Circuit’s ruling as “regrettable”, “disturbing on many levels”, and “a model of conceptual confusion”.

My thanks to attorney Dr. Steven Erickson, who made me aware of these articles.


Mr. Bernstein is a law professor at George Mason University who is a “nationally recognized expert on […] the admissibility of expert testimony”, and Mr. Schachtman writes a blog that focuses on expert witness testimony.

I have written about Adams v. LabCorp before (here and here), so I will only briefly summarize what has transpired so far.

Mrs. Adams had five Pap tests between January 2006 and September 2008, all of which were sent to LabCorp for interpretation.  Four of those were reported as normal (January 2006, January 2007, March 2008, September 2008), and one (October 2007) was reported as ASC-US.

Mrs. Adams was diagnosed with cervical cancer in August 2009 and she and her husband filed suit against LabCorp in September 2010, alleging it is liable for the negligence of its employees who “misinterpreted and reported inaccurate test results” that “permitted her cancer to metastasize.”

They hired Dr. Dorothy Rosenthal, a pathologist at Johns Hopkins University, as their expert witness.  Dr. Rosenthal concluded:

…LabCorp’s cytotechnologists’ review of Ms. Adams’s slides fell short of the applicable standard of care by failing to identify abnormal cells that should have been identified.

It is important to note Dr. Rosenthal, after fully being made aware that the patient had cervical cancer, went to the defendant’s lab and reviewed only the Pap tests the plaintiffs alleged contained dysplastic cells that were missed by the cytotechs and defendant pathologist, and nothing more.

LabCorp filed a motion to exclude Dr. Rosenthal’s testimony on the basis her review was “tainted by an unreliable methodology”, and also asked for summary judgment if her testimony was excluded.

[Read more…]

Kickback allegations against LabCorp in Georgia whistleblower suit dismissed



A US district court judge in Atlanta has dismissed the federal kickback allegations made against LabCorp in a whistleblower suit filed by Chris Riedel, former owner of Hunter Laboratories.  At the same time, the judge remanded the suit’s state law claims back to Georgia state court.


Mr. Riedel originally filed the current whistleblower suit against both LabCorp and Quest Diagnostics in January 2008, and alleged the two lab giants made false claims to Georgia Medicaid by submitting claims for payment that were significantly higher than the maximum allowable reimbursement rates under Georgia’s Medicaid program.

Mr. Riedel also accused Quest and LabCorp of “provid[ing] kickbacks in the form of deeply discounted private rates to draw in large volumes of ‘pull through’ Medicaid and other referrals” and argued this is a violation of the federal Anti-Kickback Statute (AKS).

The state of Georgia declined to intervene in the suit in August 2012, but Mr. Riedel continued with the action on his own.  Because of the distinctly federal question raised by the AKS allegation, the case was removed to federal court on May 31, 2013.

Quest and LabCorp filed motions to dismiss the suit in July 2013, which Mr. Riedel opposed.  Then in November 2013, the court was notified Mr. Riedel and Quest had agreed on the financial terms of a settlement, but still needed to negotiate non-financial terms.  Apparently those negotiations were eventually successful, because according to court documents, the settlement agreement between Mr. Riedel and Quest was executed on March 5, 2014.  To my knowledge, the contents of that agreement have never been made public.

Mr. Riedel amended his complaint against LabCorp (which was not a party to the settlement agreement) in January 2015, but still alleged LabCorp offered deeply discounted rates to parties other than Georgia Medicaid, and made false claims to Georgia Medicaid by “falsely representing that the fees being charged were no greater than the maximum fees payable pursuant to Georgia regulations.”

In addition, Mr. Riedel again argued these deeply discounted rates, which were lower than LabCorp’s cost to perform the tests, were a kickback designed to induce the referral of tests for beneficiaries of government health care programs, which were then billed out at much higher rates.

[Read more…]

“Absolute, complete dissatisfaction” with UnitedHealthcare/BeaconLBS pilot program

BeaconLBSModern Healthcare published an interesting article a few days ago about the Laboratory Benefit Management Program (LBMP) pilot in Florida created by UnitedHealthcare (UHC) and LabCorp subsidiary BeaconLBS that quotes a spokesperson for the Florida Medical Association as saying there is “absolute, complete dissatisfaction” with the program.

I am currently out of town and cannot write very much about the Modern Healthcare article, but here are some of the take-home points:

  • The LBMP affects about 430,000 patients in Florida.
  • UHC says lab costs for its members have increased 10% a year.
  • UHC is also concerned about “wide variations in testing quality among labs”.
  • UHC will decide in the next few months whether the LBMP pilot will be expanded to additional states.
  • A spokesman for the Florida Medical Association says there is “absolute, complete dissatisfaction with this program.”
  • The Florida Medical Association has drafted legislation to block other insurers from instituting similar programs.
  • The BeaconLBS system does not work with many EHRs.
  • Orthopedic surgeon Dr. Michael Wasylik says computer entry on the BeaconLBS system required “like 22 clicks”, required him to sign out of his EMR, and simply takes too long.  Just talking about it “makes [him] want to puke.”
  • The operations manager for Reliance Pathology Partners in Tampa Florida says it is an attempt to “force everyone to send [testing] to LabCorp”.
  • The American College of Rheumatology has also communicated its displeasure with the program to UHC.
  • Robert Michel of The Dark Report says the LBMP shuts out about half of the laboratories to which UHC’s physicians used to send specimens.
  • BeaconLBS did not respond to requests for comment.

The link to the Modern Healthcare article is here.

The link to my previous posts on the BeaconLBS/UHC program is here.

LabCorp and BioReference Laboratories sued for missing endometrial cancer

gavelMs. Jacquelyn Graulty has filed a lawsuit in Louisiana against LabCorp and BioReference Laboratories in which she alleges the laboratories were negligent in “preparing, testing, reading, reviewing, analyzing, categorizing, reporting, and storing” her Pap smear and histologic slides, and this led to a delay in the diagnosis and treatment of her endometrial cancer.  Ms. Graulty’s former gynecologist and medical practice are also named as defendants.

Factual Allegations

Ms. Graulty originally presented to gynecologist Dr. Susan Jeanfreu at Fleur De Lis OB/GYN Associates on November 11, 2008 with complaints of a “possible bacterial infection”.  Dr. Jeanfreu performed a Pap smear and sent it to LabCorp, which reported “Epithelial cell abnormality, atypical squamous cells of undetermined significance [ASCUS]”.

Approximately one month later, Ms. Graulty returned to Dr. Jeanfreu, who sampled her ectocervix and endocervix, which were also sent to LabCorp. LabCorp identified focal mild dysplasia with HPV-associated change in the ectocervix “not inconsistent” with the patient’s prior ASCUS Pap; the endocervical curettage was unremarkable.

A few days before LabCorp’s report came out, Dr. Jeanfreu performed a colposcopy, and determined Ms. Graulty had Cervical Intraepithelial Neoplasia I (CIN-I).

In September 2009, Ms. Graulty came back to Dr. Jeanfreu complaining of vaginal bleeding.  Dr. Jeanfreu altered Ms. Graulty’s birth control and performed another Pap smear, which LabCorp reported as normal.

In January 2012, Ms. Graulty returned to Dr. Jeanfreu with complaints of vaginal bleeding.  Dr. Jeanfreu again altered Ms. Graulty’s birth control, and performed another Pap smear.  This time the Pap was sent to GenPath, which is owned by BioReference Laboratories; GenPath reported the Pap smear was normal.  A pelvic ultrasound at that time showed diffuse adenomyosis.

Over the next six months Ms. Graulty continued to have vaginal bleeding and returned to Dr. Jeanfreu several times, who reportedly simply altered Ms. Graulty’s birth control regimen.

In July 2013, Ms. Graulty moved to Pennsylvania and started seeing a new gynecologist, Dr. Kerri McIntyre, for her continued vaginal bleeding. Dr. McIntyre discontinued Ms. Graulty’s birth control pills and ordered an ultrasound and lab tests, the results of which are not included in the lawsuit.

[Read more…]

Florida pathologists encouraged to fight UnitedHealthCare and BeaconLBS

FSP logo

The College of American Pathologists and the Florida Society of Pathologists have composed a letter of opposition to the Laboratory Benefit Management Pilot Program (LBMP) created by UnitedHealthCare (UHC) and administered by BeaconLBS that is scheduled to begin on January 1, 2015 in Florida.  I recommend all Florida pathologists sign on to the letter to fight against the implementation of this horrible program.

For those who do not know, BeaconLBS describes itself as follows:

BeaconLBS® is a laboratory benefit solutions company that enables health plans, physicians and network labs to connect and deliver high-quality, cost-effective care to patients. BeaconLBS® is distinctive in its approach, offering a fully integrated, solutions-based technology that automates real-time clinical and financial decision-making at the point of care and point of ordering.

UHC partnered with BeaconLBS, a wholly-owned subsidiary of LabCorp, to create the LBMP, which is supposedly designed to “help improve quality of care and manage appropriate utilization for outpatient laboratory services.”

But instead, I believe it will create a huge amount of unnecessary administrative work for referring physicians, laboratories and pathologists that will render them tremendously inefficient and actually harm patient care.

The LBMP will require referring physicians to notify Beacon if they intend to order any tests that appear on an 80-test list that includes molecular and genetic tests, flow cytometry and essentially all anatomic pathology tests, including simple biopsies, cytology (including Pap smears) and immunohistochemistry.  Two additional tests, BRCA-1 and BRCA-2, will require permission from BeaconLBS before they can be ordered.

Ridiculously, if a referring physician fails to notify Beacon, but the lab to which the test was sent performs the requested test anyway, it is the lab, and not the physician whose responsibility it was to notify Beacon, that will be penalized and not reimbursed for the test it performed. [Read more…]

Quest Diagnostics, LabCorp accused of duplicative testing, billing in recently unsealed suit


A former phlebotomist for Quest Diagnostics filed a qui tam (whistleblower) suit on July 27, 2012, alleging her former employer and LabCorp knowingly submitted “false and fraudulent claims to the United States and the State of California…for the same tests, performed on the same day, on the same patient” since at least 2002.  The suit was unsealed on October 6th, 2014 after a US District judge denied the federal government’s motion for a fifth extension of time to consider whether it would intervene in the suit.


According to the complaint, Elisa Martinez was hired by Quest to work as a phlebotomist at its patient service center (PSC) in Red Bluff California.  She was placed on leave under the Family and Medical Leave Act for undisclosed reasons in February 2011 and was terminated in June 2011.

Just before she advances her allegations, Ms. Martinez highlights the fact Quest paid $302 million in 2009 and Quest and LabCorp paid $241 million and $49.5 million, respectively, in 2011 to settle fraud allegations.

She then provides four examples in which Quest received orders from different physicians to perform the same tests on the same patient and instead of merely sending the results of one set of tests to the ordering physicians, allegedly performed duplicate blood and urine testing and billed Medicare twice.

In one case, Ms. Martinez says a phlebotomist poured urine from one specimen cup into a second cup so as to facilitate the duplicate testing.

[Read more…]

UnitedHealthcare delays Lab Benefit Management Program; Forensic pathologist Dr. Norman Thiersch resigns


Back in July, I talked about UnitedHealthcare‘s (UHC) Laboratory Benefit Management Program (LBMP) that is to be administered by Beacon Laboratory Benefit Services, Inc. (BeaconLBS), a wholly-owned subsidiary of LabCorp.

Readers can refer to my previous post for more specific information, but basically, the LBMP appears to be very cumbersome and will require physicians to notify BeaconLBS before ordering certain laboratory tests, including anatomic pathology.  Participating laboratories must verify Beacon has been notified before performing any of the tests on the 82-test list, or else risk not being reimbursed for the test(s).

In addition, the LBMP:

…mandates essentially all malignant and pre-malignant diagnoses must have a second review in order for the claim to be paid, and in many instances it requires a sub-specialist to perform the second review.

Board-certified anatomic pathologists will no longer be permitted to sign out any malignant cytology or derm cases, or any lymphoma specimens (both nodal and extra nodal), without a second read by a pathologist who is board-certified or board-eligible in that sub-specialty.

In addition, any labs which sign out bone marrow studies must have sub-specialty certification in hematopathology.

[Read more…]

Esoterix Genetic Laboratories sues Qiagen for patent infringement

Esoterix logo

Esoterix Genetic Laboratories has filed a lawsuit against Qiagen, claiming the German company breached a License Agreement signed in 2008 that involves a patent for detecting epidermal growth factor receptor (EGFR) mutations.


In 2008, a British company called DxS Ltd, which was purchased by Qiagen in 2009, signed a License Agreement with Genzyme Corporation.  This agreement allowed DxS to manufacture and sell test kits for detecting EGFR mutations that utilized US Patent No. 7,294,468 (‘468) in exchange for royalty payments.

The ‘468 patent, a “Method to determine responsiveness of cancer to epidermal growth factor receptor targeting treatments”, was originally assigned to The General Hospital Corporation, which does business as Massachusetts General Hospital (MGH), and the Dana Farber Cancer Institute on November 13, 2007.

But pursuant to an agreement announced on May 2, 2005, Genzyme Corporation, and not MGH and Dana Farber, actually had rights to the ‘468 patent.

When LabCorp acquired Genzyme Corporation in December 2010, it created Esoterix to control the assets acquired from Genzyme, which included the rights to the ‘468 patent.

The License Agreement DxS signed (and Qiagen assumed), allowed Qiagen to sell products utilizing the ‘468 patent for non-commercial research only until the entire EGFR test kit gained approval by the Food and Drug Administration (FDA).

[Read more…]

LabCorp suffers setback in Pap test negligence suit


The Court of Appeals for the 11th Circuit has reversed a district court’s ruling in a Pap test negligence suit filed by a woman who claims she developed metastatic cervical cancer due to multiple misreadings of her Pap tests by LabCorp employees.

In its decision, the appellate court noted its disagreement with the district court’s reliance upon the Pap test litigation guidelines put together by the College of American Pathologists (CAP) and the American Society of Cytopathology (ASC).

Case details

I first wrote about this case way back in February 2012, when it was being heard by the district court.

Very briefly, Christina Adams had five Pap tests between January 2006 and September 2008, all of which were sent to LabCorp for interpretation.  Four of those were reported as normal (January 2006, January 2007, March 2008, September 2008), and one (October 2007) was reported as ASC-US.

Ms. Adams was diagnosed with cervical cancer in August 2009.  It is unclear to me based on what I have read whether it was metastatic when she was diagnosed or metastasized later.

She and her husband filed suit against LabCorp in September 2010, alleging it is liable for the negligence of its employees who “misinterpreted and reported inaccurate test results” that “permitted her cancer to metastasize.”

The plaintiffs hired Dr. Dorothy Rosenthal, a pathologist at Johns Hopkins University, as their expert witness.  Dr. Rosenthal performed a non-blinded review of only the Pap tests in question and nothing else and concluded:

…LabCorp’s cytotechnologists’ review of Ms. Adams’s slides fell short of the applicable standard of care by failing to identify abnormal cells that should have been identified.

[Read more…]