LITTLE IS KNOWN about the reasons why the Attorney General (AG) of California recently served subpoenas to Quest Diagnostics Incorporated and Laboratory Corporation of America.
News of the subpoenas surfaced when both laboratory companies dis- closed the news in regulatory filings with the Securities and Exchange Commission (SEC). Quest Diagnostics was first to disclose this fact in an SEC form filed on Friday May 19. Just four days later, on May 23, LabCorp filed a similar form with the same news.
Both companies, using almost identical wording, revealed that they had “received a subpoena from the California Attorney General seeking documents related to billing to the state’s Medicaid program. The subpoena relates to various time frames ranging from three to ten years.” Both Quest Diagnostics and LabCorp indicated that they would cooperate with the AG’s office in this matter.
Many Are Still Unaware
Even three weeks after the public disclosure by the two blood brothers that each had received a subpoena relating to billings involving the MediCal program, few lab executives in the Golden State were aware of this development. Calls to the California Attorney’s office have been met with the simple answer that it “cannot discuss any details about an ongoing investigation and it cannot confirm whether an investigation is taking place.”
In a conversation with THE DARK REPORT, one lab executive who works in California observed that it has been a constant battle by clinical laboratories in the state to maintain adequate reimbursement for Medicaid testing. His concern was that these subpoenas had the potential to surface findings unfavorable to the lab industry—and that MediCal program administrators would use this negative development as a way to enact more onerous regulations for submitting claims.
THE DARK REPORT believes another explanation may be that a laboratory whistleblower has caught the attention of the California Attorney General’s office. California has its own whistleblower law, similar to the federal qui tam statute.
Another possible link might be to research being conducted by the U.S. Attorney’s office of Newark, New Jersey that involves the “business and financial records regarding capitation and risk sharing arrangements with government and private payers for the years 1993 through 1999.” Subpoenas in this matter were served to Quest Diagnostics and LabCorp in June 2005. (See TDR, June 20, 2005.) However, this remains speculation until government officials comment publicly on both matters.