The SDNY U.S. Attorney’s Office has targeted several labs and their principals for False Claims Act violations arising out of reimbursements for COVID-19 testing services.  In a complaint filed on June 13, the government sued LabQ Clinical Diagnostics, Dart Medical Laboratory, Community Mobile Testing, and their CEO, Moshe Landau.

In response to the COVID pandemic, Congress mandated that private health insurers cover COVID-19 testing and required government health care programs to also cover such testing.  For uninsured persons, Congress appropriated funds for a federal program to reimburse health care providers furnishing COVID-19 testing to uninsured persons (the “Uninsured Program”), administered by an agency within the Department of Health and Human Services.  Before seeking reimbursement, however, COVID-19 testing providers were required to confirm that the patients were uninsured and no one else would pay for the testing. 

The government alleges that the defendants violated the Uninsured Program and the False Claims Act by submitting claims when the testing had been or would be reimbursed by another payment source, and/or when the testing was provided to people who had health coverage.  Defendants allegedly billed for testing actually paid by other organizations, discouraged patients from providing insurance confirmation, and submitted claims where their records showed the patients had health coverage. 

Defendants’ testing business expanded dramatically during COVID-19, and from May 2020 to March 2022, LabQ and Dart Medical received approximately $130 million from the Uninsured Program.  Community Mobile Testing operated over 100 “LabQ Mobile Testing Sites” in New York City from 2020 through 2022.  Once the federal program’s funds were exhausted, however, Landau allegedly instructed LabQ employees to drastically cut all payrolls because the business could not continue without the Uninsured Program. 

The complaint alleges specifically that:

  • LabQ, Dart Medical, and Landau double-billed the Uninsured Program and other health care payors for the same testing;
  • LabQ and CMT employees frequently told patients that LabQ did not need insurance information;
  • LabQ, Dart Medical, and Landau submitted claim for patients for whom they had insurance information; and
  • LabQ, Landau and Dart Medical sought reimbursement from the Uninsured Program for patients with health care coverage where they believed the insurer might deny claims for reimbursement. 

The government has been aggressively pursuing fraud claims related to COVID pandemic funding, and in this case is asserting public harm because the funds improperly taken by defendants depleted the funds Congress made available for uninsured persons during the pandemic.  The defendants’ responses to the complaint will be due in mid-August.