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.