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…]

$15.8 million award against LabCorp for Pap smear error cut to $4.4 million



A district judge in Florida has reduced the damages a jury ordered LabCorp to pay to the family of a woman who died of cervical cancer from $15.8 million to $4.4 million.

I first wrote about this case back in April, not long after the jury rendered its verdict.  Briefly, 33 year old Darian Wisekal began feeling “ill” in 2007.  A workup in 2008 included a Pap smear, which was reportedly read as negative by a LabCorp cytotechnologist.

Mrs. Wisekal was due to have another Pap smear in 2009, but reportedly on the advice of her physician, she postponed it until the following year.  The Pap smear performed in 2010 was also read as negative by a LabCorp cytotechnologist.

Within a week of the second negative Pap smear, she was hospitalized and diagnosed with cervical cancer, to which she succumbed the following November.

Her family sued LabCorp, claiming it was negligent when its cytotechnologist missed “high grade lesions” that were present on her 2008 pap smear.

LabCorp argued in court documents that it was not negligent, that Mrs. Wisekal’s tumor was “not subject to detection by a pap smear”, and that she was at fault for not “obtain[ing] a pap smear in 2009″.

[Read more…]

LabCorp and UnitedHealthcare to introduce BeaconLBS in Florida


On October 1, 2014, UnitedHealthcare (UHC) will roll out its Laboratory Benefit Management Program in Florida, which will be administered by Beacon Laboratory Benefit Services, Inc. (BeaconLBS), a wholly-owned subsidiary of LabCorp.

According to the “About” page of the BeaconLBS website:

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 states the Laboratory Benefit Management Program (LBMP) is for now only a pilot program and will only apply to outpatient laboratory services for fully-insured UHC Commercial members.  Currently there are multiple benefit plans that will be excluded.

We have heard of BeaconLBS before

BeaconLBS has been around since at least late 2011, as both Laboratory Economics and The Dark Report reported on it in September and December of 2011, respectively.

At that time, however, it is my understanding BeaconLBS was mainly intended to be limited to managing preauthorizations of “expensive genetic and molecular assays”, as The Dark Report explained.

Not just for expensive tests anymore

BeaconLBS, at least the way UHC is using it, is now an absolute beast that will require referring physicians to provide BeaconLBS with advance notification if they want to order any of the 82 tests specified on pages 10-13 of UHC’s Administrative Protocol.

[Read more…]

LabCorp wrests upstate NY VA contract away from Quest Diagnostics


A federal judge has sided with LabCorp in its post-award bid protest of an upstate New York Veteran’s Administration (VA) contract that had been awarded to Quest Diagnostics.

I originally wrote about this case on June 11th, right after the judge had ruled on whether two declarations from LabCorp experts were admissible.  The judge filed this final decision under seal a few days later, but it only became available to the public on June 23rd.

Briefly, the VA recently awarded a contract to provide laboratory services at five upstate New York VA Hospitals to Quest Diagnostics.  LabCorp, the incumbent contractor, protested, alleging the contract was improperly awarded, as the VA did not evaluate pricing “rationally”.

QuestAfter considering all 2,365 pages of the administrative record as well as all arguments, the judge stated he “has great difficulty accepting the VA’s method of conducting” the award process.

The judge then went on to illustrate six VA actions that were “arbitrary and capricious and lacking a rational basis”:

1)  The VA mainly evaluated bidders on the number of tests they offered in their proposals, but never told the bidders the number of tests they offered would be evaluated at all.

[Read more…]

Quest Diagnostics awarded upstate New York VA contract; LabCorp protests


The Department of Veterans Affairs recently awarded a contract to provide laboratory services at five upstate New York VA Hospitals to Quest Diagnostics.  LabCorp, the incumbent contractor, protested, alleging the contract was improperly awarded and offered two supporting declarations, one of which the judge has just determined is inadmissible.


Unfortunately, many of the documents, including LabCorp’s original complaint as well as pertinent motions and responses, are sealed from public view, so the only information I have is that which is provided in the most recent order.

The VA evaluated bidders based on six factors and sub-factors.  One of those factors was pricing, which apparently held the lowest priority.  Specifically, bidders were asked to submit pricing for 1,575 different tests based on the VA’s estimated utilization for 2014.

At the end of the process, the contract was awarded to Quest.  LabCorp filed its complaint on April 4, 2014 and claimed, among other things, the VA did not evaluate pricing rationally.  In addition, LabCorp alleged the VA used an unstated criterion that took into account how many of the 1,575 tests each bidder offered, which resulted in an “apples to oranges” comparison in which total price was evaluated against a different number of tests for each bidder.

QuestLabCorp submitted a declaration from an outside economist which contained “extensive mathematical analysis” of the pricing proposals, pointed out the flaws in the VA’s evaluation process and offered ways in which it could have been more “rational”.

LabCorp also submitted a declaration from a witness who stated the VA, in 2013, ordered far fewer tests than the 1,575 in the solicitation.

On May 12, 2014, the government filed a motion to strike the declarations, arguing both contained facts and opinions the VA did not consider during the bid evaluation process.

LabCorp countered that the information contained within the economist’s declaration is based solely on data within the (2,365 page!) administrative record and corrects errors the VA made.  It contends the other declaration contains historical information the VA should have used in its evaluation.

Judge’s order

Relying on precedent, the judge stated, in cases of bid protests, the court should focus on the existing administrative record and nothing new, unless omitting the new material would preclude effective review of the existing record.

[Read more…]

Judge dismisses LabCorp from Virginia whistleblower suit


A federal judge has dismissed with prejudice (at least with respect to LabCorp) the qui tam (whistleblower) suit filed by Chris Riedel of Hunter Laboratories against Quest Diagnostics and LabCorp that alleged the two lab giants committed Medicaid fraud in Virginia.

The suit was originally filed in 2007 but was unsealed and moved to federal court in 2013, which is when I first learned of it and started writing about it.

Basically, Mr. Riedel alleged Quest and LabCorp charged Virginia Medicaid significantly more for laboratory testing than they charged non-government payors, and this was a violation of the Virginia Fraud Against Taxpayers Act (VFATA) and the federal Anti-Kickback Statute.

The judge disagreed with Mr. Riedel’s argument and said labs are not actually required to charge Virginia Medicaid the lowest rate they charge non-government payors; Virginia Medicaid is simply required to pay the lowest rate.  I go into more depth on this issue in this post for those interested.

Furthermore, the judge stated Mr. Riedel failed to provide even a single example of a false claim filed by either laboratory to Virginia Medicaid, which he is required to do by the Federal Rules of Civil Procedure.

The judge then dismissed the suit, but gave Mr. Riedel an opportunity to amend his complaint and try again, which he did in December 2013.

In that amended complaint, Mr. Riedel altered his argument slightly but maintained the original allegations—that the labs charged Virginia Medicaid more than they charged other payors, and therefore violated state and federal law.

LabCorp filed a motion to dismiss the amended complaint, and the judge granted the motion, stating Mr. Riedel again failed to adequately plead his case and, even after being given explicit instructions to do so, failed “to identify at least a single false claim”.

The judge further ruled that given the fact Mr. Riedel had two opportunities to make his case (original complaint and amended complaint), and failed to do so, giving him another chance would be futile and would be unfair to LabCorp.

The case was then dismissed with prejudice, meaning it cannot be refiled, but can be appealed.  It remains to be seen if Mr. Riedel will appeal.

At the very end of the judge’s order it says, “This Order CLOSES the case” (emphasis in original), and I do not know for sure if this means the order also applies to Quest, or if the order only applies to LabCorp and Quest is still on the hook.

As I stated in my previous post, Quest entered into a provisional settlement with Mr. Riedel in late 2013, but that settlement is still under a stay, so it will be interesting to see what happens there.

The judge’s order is here.