LabCorp has announced a $49.5 million settlement to resolve a Medicaid fraud lawsuit. One of seven lab testing companies named in the 2005 suit, LabCorp was accused of overcharging California’s Medicaid program and giving doctors kickbacks in return for referrals.

The second of seven named companies, LabCorp follows a competitor, Quest Diagnostics, the latter having recently settled for $241 million. The impetus behind the three-year investigation by the California Attorney General’s office was whistleblower Hunter Laboratories. The California lab testing company’s complaint, California ex rel. Hunter Laboratories v. Quest Diagnostics, et al., claimed some companies violated California laws requiring providers to bill Medi-Cal “the lowest rates for the same services under comparable circumstances,” as well as violating restrictions against kickbacks, bribes or rebates for referrals.

The California Attorney General’s office believes in some cases Medi-Cal had been fraudulently billed for more than 15 years. While California law requires a $10,000 penalty for each false claim, the proposed settlement resolves all such claims, and avoids a planned early 2012 trial.

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