Labcorp Agrees to Pay $14.5 Million to Resolve False Claims Act Allegations Involving Urine Drug Testing

The Department of Justice (DOJ) has announced that Laboratory Corporation of America (Labcorp) will pay $14.5 million to resolve allegations that it violated the False Claims Act (FCA) by submitting false claims to Medicare for medically unnecessary urine drug testing. The settlement concerns Labcorp’s use of a preselected testing panel known as “ToxAssure Comprehensive.”

Urine drug testing generally involves two types of testing: Presumptive testing determines whether certain classes of drugs are present in a patient’s sample. Definitive testing identifies specific substances and, where applicable, their concentrations. Medicare generally pays a single bundled rate for laboratory-based presumptive testing, regardless of the number of drug classes tested. Definitive testing is also reimbursed through bundled codes based on the number of drug classes included. The highest definitive testing tier, HCPCS code G0483, applies to testing for 22 or more drug classes.

Labcorp’s ToxAssure Comprehensive Panel

According to the government, Labcorp’s ToxAssure Comprehensive panel combined presumptive testing for certain substances with direct-to-definitive testing for others. Direct-to-definitive testing means that the laboratory performs a definitive test without first conducting a presumptive test for that substance.

The DOJ alleges that Labcorp routinely performed the presumptive and definitive portions of the panel simultaneously on the same patient, on the same date of service, and using the same urine sample. Labcorp then billed Medicare under both CPT code 80307 for presumptive testing and HCPCS code G0483, the highest definitive testing tier. For several substances included in the direct-to-definitive portion of the panel, a presumptive testing option was available. Nevertheless, Labcorp performed definitive testing without first using presumptive testing to determine whether the more extensive testing was necessary.

The government alleged that this standardized combination of presumptive testing and highest-tier definitive testing resulted in medically unnecessary claims for some Medicare beneficiaries. As part of the settlement, Labcorp represented that it had stopped billing Medicare for the combination of codes 80307 and G0483 when using the ToxAssure Comprehensive panel.

Cooperation and Remediation

Notably, the DOJ credited Labcorp under its FCA cooperation guidelines for its disclosure, cooperation, and remediation. The settlement demonstrates that meaningful corrective action can affect the government’s resolution of an investigation, even when the conduct involves a large national provider and continued over several years.

GWB represents healthcare providers in connection with government investigations and False Claims Act litigation. If you need assistance with such a matter, contact us today.