Blue Cross and Blue Shield of Minnesota is suing laboratory GS Labs in a federal court in Minnesota to recover what it believes to be more than $10 million in overpayments for COVID-19 tests.
Filed in the U.S. District Court of Minnesota, the complaint alleges that GS Labs defrauded Blue Cross by submitting tens of thousands of claims using inflated cash prices over the past year.
Blue Cross alleges that GS Labs "consistently and intentionally" posted inflated cash prices on its public website, enabling the company to charge significantly larger amounts to Blue Cross than what it was willing to accept from individual cash-paying customers.
Blue Cross noted that according to the Coronavirus Aid, Relief, and Economic Security (CARES) Act, COVID-19 testing providers are required -- in the absence of a contractual payment agreement -- to post specific cash prices that insurers are then required to pay.
After reviewing billing data, Blue Cross found that GS Labs consistently charged more than five times the median market rate for its most commonly administered COVID-19 diagnostic test. Furthermore, Blue Cross alleges that GS Labs pursued a "pattern and practice" of administering additional tests for the sole purpose of increasing the total amount charged to the company.
"It is our claim that GS Labs intentionally disregarded and misinterpreted federal guidelines for the sole purpose of maximizing profits during a public health emergency," said Scott Lynch, Blue Cross and Blue Shield of Minnesota senior vice president of pharmacy and chief legal officer, in a statement. "After months of attempts at good-faith negotiations, we were unable to reach an agreement with GS Labs that would put in place appropriate COVID-19 testing practices at a fair price. It's egregious price-gouging like this that ultimately drives up the cost of health care for everyone."
GS Labs was the subject of a critical article in the New York Times in October 2021 that accused the company of price-gouging for COVID-19 tests. The company has also been hit with a lawsuit by Premera Blue Cross in western Washington state.