United States of America et al v. Laboratory Corporation of America Holdings

Filing 404

ORDER AND OPINION: LabCorp's motion for summary judgment (Dkt. No. 326) is denied. AND IT IS SO ORDERED. Signed by the Honorable Richard M Gergel on 6/15/21.(ltap, ) Modified on 6/16/2021 to edit for document type (Opinion)(sshe, ).

IN THE UNITED STATES DISTRICT COURT
DISTRICT OF SOUTH CAROLINA
BEAUFORT DIVISION
United States of America, et al., ex rel.
Scarlett Lutz and Kayla Webster,

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)
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Plaintiffs/Relators,
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)
v.
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Laboratory Corporation of America
)
Holdings,
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Defendant.
)
___________________________________ )

C/A No. 9:14-3699-RMG

ORDER AND OPINION

Before the Court is Defendant Laboratory Corporation of America Holdings’
(“LabCorp”) motion for summary judgment. (Dkt. No. 326.) For the reasons set forth below, the
motion is denied.
I.

Background
This is a qui tam action in which the United States of America declined to intervene.

Relators allege that, from approximately early 2010 to mid-2014, LabCorp’s in-office
phlebotomists (“IOPs”), who are blood draw and processing technicians employed by LabCorp
and stationed by LabCorp inside doctors’ offices, drew blood from patients at the doctors’
request and with knowledge that the doctors were receiving illegal kickbacks (referred to as
processing and handling fees, or “P&H fees”) from third-parties Health Diagnostic Laboratory
and Singulex, Inc. (collectively, “HDL/S”) in exchange for the doctors referring the blood that
the IOP had drawn to be tested by HDL/S. Relators claim that LabCorp’s was aware that the
doctors were receiving kickbacks from HDL/S, as evidenced by, among other things, LabCorp’ s
2013 and 2014 anonymous requests for Special Fraud Alerts from the Office of Inspector
General (“OIG”) on HDL’s P&H payments. HDL/S billed the federal government for those lab

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tests under the patients’ Medicare Part B coverage, which Relators allege were tainted by the
kickback and therefore in violation of the Anti-Kickback Statute (“AKS”). Relators further
allege that LabCorp drew blood to be tested by HDL/S if the doctors also referred blood to be
tested by LabCorp. LabCorp then itself billed the federal government for that test, even though it
had induced the referral and provided the blood test at no charge to the doctor. Although, in at
least one region of LabCorp’s business, LabCorp requested the doctors pay a $5 blood draw fee.
A blood draw for testing at two labs was done via a single venipuncture to the patient, referred to
by LabCorp as a “courtesy draw” because the patient was spared from two venipunctures for two
tests. (Dkt. No. 50.)
LabCorp previously moved to dismiss the portions of every claim predicated on allegedly
medically unnecessary tests, as well as Count II for reverse false claims, Count III for violation
of California law, and Count IV for violation of Illinois law. LabCorp did not move to dismiss
the portions of claims predicated on violation of the AKS. The Court granted in part and denied
in part LabCorp’s motion, dismissing the portions of each claim predicated on medically
unnecessary tests, as well as dismissing Count II, Count III and Count IV. (Dkt. No. 72.) The
remaining claim is Count I, under which Relators allege that LabCorp violated the FCA in three
ways: (1) knowingly causing HDL/S’s false claims to be presented, § 3729(a)(1)(A); (2)
knowingly presenting its own false claims, § 3729(a)(1)(A); and (3) conspiring with HDL/S to
knowingly cause HDL/S to present false claims or to present its own false claims, §
3729(a)(1)(C). (Dkt. No. 50 ¶¶ 582-588.)1

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Count I also alleges that LabCorp violated § 3729(a)(1)(B), which imposes liability on one who
“knowingly makes, uses, or cause to be made, or used, a false record or statement material to a
false or fraudulent claim.” (Dkt. No. 50 ¶ 587.) As LabCorp states in its motion for summary
judgment, “Relators principally seek liability under 31 U.S.C. § 3729(a)(1)(A), for the
presentment of false claims, but also allege liability under 31 U.S.C. § 3729(a)(1)(B), for the use
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II.

Legal Standard
Summary judgment is appropriate if a party “shows that there is no genuine dispute as to

any material fact” and the movant is entitled to judgment as a matter of law. Fed. R. Civ. P.
56(a). A dispute is “genuine” if the evidence offered is such that a reasonable jury might return a
verdict for the non-movant. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A
fact is “material” if proof of its existence or non-existence would affect disposition of the case
under applicable law. See id. Therefore, summary judgment should be granted “only when it is
clear that there is no dispute concerning either the facts of the controversy or the inferences to be
drawn from those facts.” Pulliam Inv. Co. v. Cameo Props., 810 F.2d 1282, 1286 (4th Cir. 1987).
“In determining whether a genuine issue has been raised, the court must construe all
inferences and ambiguities in favor of the nonmoving party.” HealthSouth Rehab. Hosp. v. Am.
Nat’l Red Cross, 101 F.3d 1005, 1008 (4th Cir. 1996). The movant bears the initial burden of
demonstrating that there is no genuine issue of material fact. See Celotex Corp. v. Catrett, 477
U.S. 317, 323 (1986). Once the movant has made this threshold demonstration, the non-moving
party must demonstrate specific, material facts that give rise to a genuine issue. See id. at 324.
“Conclusory or speculative allegations do not suffice, nor does a ‘mere scintilla of evidence’” in
support of the non-moving party’s case. Thompson v. Potomac Elec. Power Co., 312 F.3d 645,
649 (4th Cir. 2002) (quoting Phillips v. CSX Transp., Inc., 190 F.3d 285, 287 (4th Cir. 1999)).

of false records material to false claims. To the extent that Relators still pursue both theories,
LabCorp’s arguments apply equally to them.” (Dkt. No. 327 n.4.) Relators’ opposition does not
address the § 3729(a)(1)(B) allegation. By declining to address the merits of this claim in
response to a dispositive motion, Relators have waived the claim. See, e.g., United States ex. rel.
Holbrook v. Brink’s Co., 336 F. Supp. 3d 860, 874 (S.D. Ohio 2018) (granting summary
judgment where claim waived for lack of briefing).
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III.

Discussion

A.

Violation of § 3729(a)(1)(A) by Knowingly Causing False Claims to be Presented by
HDL/S
The FCA imposes liability on “any person who knowingly . . . causes to be presented, a

false or fraudulent claim for payment or approval.” § 3729(a)(1)(A). In other words, the “FCA
also reaches claims that are rendered false by one party, but submitted to the Government by
another.” United States ex rel. Rector v. Bon Secours Richmond Health Grp., No. 3:11-cv-0038,
2014 WL 1493568, at *9 (E.D. Va. Apr. 14, 2014). A corporation is a “person” under the
statute. Cook Cnty. v. United States ex rel. Chandler, 538 U.S. 119, 126-27 (2003).
1.

“Knowingly”
The FCA defines “knowingly” to “mean that a person, with respect to information, has

actual knowledge of the information; or acts in deliberate ignorance of the truth or falsity of the
information; or acts in reckless disregard of the truth or falsity of the information; and require[s]
no proof of specific intent to defraud.” § 3729(b)(1). The purpose of this scienter requirement is
to avoid punishing “honest mistakes or incorrect claims submitted through mere negligence.”
United States ex rel. Owens v. First Kuwaiti Gen. Trading & Contracting Co., 612 F.3d 724, 728
(4th Cir. 2010). “FCA claims require a relator to show only that the defendant had knowledge of
the illegality of its actions, rather than specific intent to defraud.” United States ex rel. Oberg v.
Penn. Higher Ed. Assistance Agency, 912 F.3d 731, 735 (4th Cir. 2019) (emphasis in original).
“Summary judgment is seldom appropriate in cases in which particular states of mind are
decisive elements of [the] claim or defense, because state of mind is so often proved by
inferences from circumstantial evidence and by self-serving direct evidence” and “knowledge is
such a state of mind.” Magill v. Gulf & W. Indus., 736 F.2d 976, 979 (4th Cir. 1984). Moreover,
“the issue of fraudulent intention is generally not amenable to resolution on summary judgment

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[because] when evidence of intention is ambiguous, summary judgment simply cannot be
awarded.” United States ex rel. Bunk v. Gov’t Logistics N.V., 842 F.3d 261, 276-77 (4th Cir.
2016) (internal citations omitted). But this does not mean that summary judgment is never
appropriate on the element of knowledge. See, e.g., Dalton v. Cap. Assoc. Indus., 257 F.3d 409,
418 (4th Cir. 2001) (upholding summary judgment where, “[e]ven though summary judgment is
seldom appropriate on whether a party possessed a particular state of mind, evidence that
[defendant] acted willfully [was] wholly lacking”). “Therefore, in order for summary judgment
to be appropriate, it must be clear that there is no issue of material fact as to whether [defendant]
acted with the requisite mental state—here, scienter.” Skibo on behalf of United States v. Greer
Labs., Inc., 841 Fed. App’x 527, 532 (4th Cir. 2021).
Reviewing this record in a light most favorable to Relators, there are disputes of material
fact as to whether LabCorp acted in reckless disregard to the falsity of the information. First, the
record reflects that at least some doctors were paid P&H fees, such as where one doctor testified
that she was paid before and while she referred tests to HDL/S. (Dkt. No. 362-23 at 8.) But
LabCorp states that it “did not learn that possibility [of HDL/S paying doctors P&H fees] until
mid-2012, when complaints increased.” (Dkt. No. 327 at 15.) The record does reflect that by
August 2012, LabCorp was aware that its IOPs had been drawing blood for doctors who were
“getting paid by HDL” and “that HDL calls the fee a ‘process and handling fee.’” (Dkt. No. 37312 at 5.) But the record also reflects that, prior to mid-2012, LabCorp was aware that certain
doctors who used LabCorp IOPs had increased their billing while referring tests to HDL/S. For
instance, in January 2011 a LabCorp employee “discovered” that a doctor, whose billing had
increased from $7,000 in November to $15,000 in December, had “also recently started doing
HDL labs toward the end of December. [The doctor] told Mike and I that he is going to do

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HDLs on his pts to get a base-line Cardiac Status. Then he will do NMRs and Lipid Cascades on
all follow-ups thereafter. We have a LCA IOP at this account.” The internal response to this
message was, “If we are drawing the lab, we are fine with drawing the lab,” and that “[t]he
account is getting $20-$30 per patient for the draw-process.” (Dkt. No. 366-29 at 3.) However,
the record also reflects that a different doctor testified that in her office, the IOP would only draw
blood for LabCorp’s own testing, after which a different phlebotomist would physically takeover
the venipuncture to draw additional blood for other labs to test. (Dkt. No. 362-23 at 8.) Even if
some doctors had a non-LabCorp phlebotomist takeover the venipuncture for non-LabCorp
testing, the record reflects that LabCorp considered this practice inappropriate when it, for
instance, noted that “because we believe that [a doctor’s practice] is being reimbursed by HDL
for the draws, we cannot be providing that service for them whether the needle is in the arm
already or not.” (Dkt. No. 372-10 at 2.) This record, therefore, reflects a dispute of material fact
as to whether LabCorp had actual knowledge that HDL/S was paying P&H fees to the doctors
for whom LabCorp knew its IOPs were drawing blood to be tested by HDL/S.
As an initial matter, LabCorp argues that there is scant evidence that its IOPs actually
drew blood for the kickback-receiving doctors. For instance, out of twenty-one doctors deposed,
twelve testified that there was no LabCorp IOP in his or her practice and six testified that there
was an IOP, but the IOP did not draw blood to be tested by HDL/S. (Dkt. No. 327 at 9.) But by
that count, there are allegedly three kickback-receiving doctors who may or did have a LabCorp
IOP in their practice that may or did draw blood for HDL/S tests. Similarly, one doctor testified
that in his own practice, he would sometimes ask a staff phlebotomist to draw blood for an
HDL/S test if the “LabCorp technician was tied up . . . and then vice versa, there may be a case
where my staff was tied up . . .” (Dkt. No. 362-13 at 4.)

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LabCorp notes that after its compliance department investigated and became aware of the
practice of IOPs drawing blood for doctors who were paid P&H fees by HDL/S, certain LabCorp
divisions stopped drawing blood for HDL/S testing, required doctors to certify that they were not
receiving P&H fees, or instituted a $5 draw fee on the doctor. For instance, the record reflects
that LabCorp’s Divisional Compliance/Safety officer in Dublin, Ohio instituted a certification
protocol. But the record is not clear that all LabCorp divisions curtailed their practice of drawing
blood for HDL/S testing for doctors known to be receiving P&H fees from HDL/S. Moreover,
regarding the $5 draw fee, there is a material dispute of fact as to whether that constituted
compensation for the blood draw, thereby rebutting any inference that LabCorp was providing
the blood draw for free in exchange for a LabCorp test referral, or whether the $5 alternatively
constituted LabCorp diverting a portion of the doctors’ P&H fee to itself.
Last, it is undisputed that in February 2013 and 2014, LabCorp requested the OIG issue a
Special Fraud Alert identifying HDL’s payment of P&H fees as a potential violation of the AKS.
LabCorp made these requests anonymously, through outside counsel, and therefore omitted
mention to the OIG of its own role in drawing the blood sent to HDL for testing. (Dkt. No. 36916 at 2.)

LabCorp contends that the Special Fraud Alert requests merely indicate that it

attempted to curb HDL’s kickback-paying practice, perhaps without sacrificing its own separate
relationship with the kickback-receiving doctors. Regardless of what intention the jury infers
from this evidence, its existence creates a genuine dispute of material fact as to whether and
when LabCorp knew HDL paid kickbacks to doctors whom LabCorp knew used IOPs to draw
the blood. As one doctor testified, he decided to change labs after he determined on his own that
the P&H fees were inappropriate, not because LabCorp notified him that P&H fees are
inappropriate. (Dkt. No. 362-13 at 6.)

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2.

“Causes”
The FCA imposes liability on a corporation that “causes” a false claim to be presented. §

3729(a)(1)(A). The phrase “causes” is not defined by the statute; it is interpreted to reflect
ordinary tort principles of proximate causation. See, e.g., United States ex rel. Sikkenga v.
Regence BlueCross BlueShield of Utah, 472 F.3d 702, 714 (10th Cir. 2006) (noting that the
“approach [that] is useful in analyzing causation under § 3729 [ ] provides a familiar test—that
of proximate causation—to determine whether there is a sufficient nexus between the conduct of
the party and the ultimate presentation of the false claim to support liability under the FCA”)
(abrogated on other grounds by Cochise Consultancy, Inc. v. United States ex rel. Hunt, 139
S.Ct. 1507 (2019)); United States ex rel. Schmidt v. Zimmer, Inc., 386 F.3d 235, 244 (3d Cir.
2004) (applying “ordinary causation principles from negligence law in determining responsibility
under the FCA”); United States v. Mallory, 988 F.3d 730 (4th Cir. 2021) (finding district court’s
jury instructions proper, which included: “In order to find a defendant’s conduct caused claims to
be submitted, you must determine that the conduct was a substantial factor in the claim being
presented to the United States and that it was foreseeable to the defendant that the claim would
be presented”); United States ex rel. Wuestenhoefer v. Jefferson, 105 F. Supp. 3d 641, 681 (N.D.
Miss. 2015) (“The causation standard employs traditional notions of proximate causation[.]”)
(citing Sikkenga, 472 F.3d 702 (10th Cir. 2006)); United States ex rel. DeCesare v. Americare In
Home Nursing, 757 F. Supp. 2d 573, 589 (E.D. Va. 2010) (applying ordinary causation
principles of proximate causation). “And under that inquiry [of proximate causation], where a
necessary and foreseeable result of the defendant’s actions is the filing of a false claim with the
government, the FCA applies.” United States ex rel. DeCesare, 757 F. Supp. 2d at 589. “Under
federal law an act will be deemed a proximate cause of a result if the act is a ‘substantial factor in

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the sequence of responsible causation, and if the [result] is reasonably foreseeable or anticipated
as a natural consequence.” United States ex rel. Wuestenhoefer, 105 F. Supp. 3d at 681 (quoting
Hecht v. Commence Clearing House, Inc., 897 F.2d 21, 23-24 (2d Cir. 1990)). “In a False
Claims Act, to establish causation a relator must show an ‘affirmative act’ going beyond ‘mere
passive acquiescence.’” Id. at 681.
The questions before the Court is whether, on this record construed in a light favorable to
Relators, a reasonable factfinder could conclude that LabCorp’s conduct—specifically, LabCorp
IOPs drawing blood for doctors to refer to HDL/S for testing when LabCorp knew those doctors
were receiving P&H fees from HDL/S for the test—was a substantial factor in HDL/S presenting
the resulting claim, and whether it was also foreseeable to LabCorp that HDL/S would present
the claim. The answer to both is yes.2
First, there is record evidence that LabCorp IOPs did in fact draw the blood that doctors
referred to HDL/S for testing in exchange for their P&H fee (as well, as discussed, as evidence
that LabCorp was aware that its IOPs were drawing that blood, and was aware that those doctors
were being paid a P&H fee by HDL/S). (Dkt. No. 366-29 at 3.) LabCorp contends that no
reasonable factfinder would conclude it was a substantial factor in HDL/S’s false claim
submissions because some doctors have testified that they would have ordered the blood to be
drawn for HDL/S tests regardless of whether it was drawn by a LabCorp IOP or some other
phlebotomist. (Dkt. No. 327 at 26 n.7.) Whether the doctor would have proceeded with drawing
blood to have tested at HDL/S in the absence of an IOP is inapposite. The issue is instead
whether the record supports finding that IOPs did draw the blood, which, as discussed, the record
2

LabCorp argues that it cannot be liable for any claims that HDL/S submitted in which a
LabCorp IOP did not draw the blood. The Court agrees. Indeed, Relators’ theory of causation
for violation of § 3729(a)(1)(A) is that LabCorp caused HDL/S to submit false claims by
providing the blood draws.
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does reflect. Second, a reasonable fact finder could also conclude that it was foreseeable to
LabCorp that HDL/S would present claims for reimbursement for those tests. LabCorp does not
point to any record evidence to show this fact is not in dispute, and it is reasonable to find that
LabCorp would have anticipated that HDL/S would seek to be reimbursed for testing on blood
drawn by an IOP. See, e.g., In re Enron Corp. Secs., Derivative & Erisa Litig., 762 F. Supp. 2d
942, 974 (S.D. Tex. 2010) (applying proximate causation and noting that “[a]ll that is required is
that the injury be of such a general character as might reasonably have been anticipated[.]”)
(internal quotation marks omitted). For instance, the record reflects that starting in at least
February 2012, LabCorp internally assessed HDL as a possible investment or acquisition
target—such as when LabCorp executives discussed that, “[w]hile some of HDL’s tactics may be
distasteful to us,” its projected 2012 revenue was $250 million. (Dkt. No. 346-15 at 2-3.) From
this, the fact finder could reasonably conclude that LabCorp was aware of HDL’s business
practices, including its P&H payments, and therefore that it was foreseeable to LabCorp that
HDL would submit claims for reimbursements on tests that are tainted by those kickbacks.
LabCorp’s motion for summary judgment on Count I’s claim for violation of §
3729(a)(1)(A) by knowingly causing HDL/S to present false claims is denied.
B.

Violation of § 3729(a)(1)(A) by Knowingly Presenting False Claims
The FCA imposes liability on one who “knowingly presents . . . a false or fraudulent

claim for payment.” § 3729(a)(1)(A). Relators allege that LabCorp provided free blood draws to
the doctors whom it knew were receiving kickbacks from HDL/S (the “courtesy draws”), in
exchange for the doctors referring a blood test to LabCorp. Relators allege that LabCorp’s free
blood draw service constituted an inducement to the doctors, in exchange for which the doctors

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gave LabCorp the testing referral, on which LabCorp then submitted its claim. (Dkt. No. 50 ¶¶
550-557.)
As to the scienter element, Relators argue that LabCorp’s “courtesy draws” were illegal
inducements reflecting that LabCorp was aware of the kickback scheme between HDL/S and the
doctors for whom LabCorp drew blood. For instance, in January 2010, LabCorp knew that an
IOP “was approached by the office to draw Lipomeds for Health Diagnostic Laboratories in
Richmond, VA, he was instructed by the office not to charge a draw fee for this patient. The
patient also had labwork to go to LabCorp, [the LabCorp rep] instructed him to put a draw fee
like usual on the order that was coming to LabCorp and that would take care of the draw for
Health Diagnostics as well.” (Dkt. No. 396-24 at 2.) LabCorp contends that because there was
no governing law or regulation identifying courtesy draws generally as improper, and because its
own corporate policy had long provided for courtesy draws, there is no material dispute of fact
that courtesy draws in these instances were not unlawful inducements.3 The fact finder could
reasonably find the record indicates that courtesy draws for doctors were merely a pre-existing
policy intended to protect patients from two venipunctures. Or, the fact finder could reasonably
conclude that these particular courtesy draws, for these doctors whom LabCorp knew were
receiving P&H fees, were cooped by LabCorp to induce doctors to make testing referrals. As
one doctor testified that, “as long as we were utilizing their lab,” he understood “it was okay for
3

LabCorp’s 1998 “Responsibilities of Patient Service Technicians” states: “LabCorp does not
offer professional courtesy testing to its clients . . . based on the federal government’s position
that providing free or deeply discounted laboratory testing to health care providers, their
families, or their employees may be construed as an unlawful inducement,” but when a patient
service technician “draws a specimen that will be sent to LabCorp for testing, he or she may
draw an additional specimen that may be tested by another laboratory,” which is done “for the
convenience of the patient, so that he or she is not subjected to multiple draws; however,
specimens may not be collected solely for other laboratories or the physician’s in-office
laboratory without the prior approval of the corporate compliance department or the law
department.” (Dkt. No. 328-1 at 54-55.)
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the LabCorp IOP to draw blood, some of which that would go to, for example, HDL and some of
which would go to LabCorp.” (Dkt. No. 362-13 at 4.) LabCorp was also aware that another
doctor, as LabCorp described, “was very up front about getting paid the collection fee”—to the
extent that one LabCorp employee assessed, “I don’t see her stopping either.” (Dkt. No. 367-10
at 2.)
LabCorp’s motion for summary judgment on Count I’s claim for violation of §
3729(a)(1)(A) by knowingly presenting false claims is denied.
C.

Violation of § 3729(a)(1)(C) by Conspiring with HDL/S to Violate the FCA
The FCA imposes liability on one who “conspires to commit a violation of subparagraph

(A)[.].” § 3729(a)(1)(C). Subparagraph (A), as discussed, imposes liability on one who
“knowingly presents, or causes to be presented, a false or fraudulent claim for payment or
approval.” § 3729(a)(1)(A). Under the FCA, “there can be no liability for conspiracy where
there is no underlying violation of the FCA.” Pencheng Si v. Laogai Research Fdtn., 71 F. Supp.
3d 73, 89 (D.D.C. 2014). The Court has already determined that this record, construed in a light
most favorable to Relators, contains genuine disputes of material fact as to whether LabCorp
knowingly caused HDL/S to present false claim and knowingly presented its own false claims.
The remaining question here, therefore, is whether the record also reflects a dispute of material
fact as to whether LabCorp conspired with HDL/S to do so.
“[T]o prove a false claim under FCA section 3729(a)(1)(C) . . ., a relator must show that
the defendant agreed with another to commit a violation of FCA sections (a)(1)(A) [or] (B) . . .
and committed an overt act in furtherance of the violation.” United States v. Catholic Health Sys.
of Long Island, Inc., No. 12-cv-4425-MKB, 2017 WL 1239589, at *8 (E.D.N.Y. Mar. 31, 2017)
(reviewing claim on summary judgment and noting that “although the wording of the sections [§

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3729(a)(1)(C)] changed slightly, there was no substantive difference between the 1994 and 2009
version of the statute for these sections” as a result of the 2009 Fraud Enforcement Recovery
Act). “‘Conspire’ in this context requires a meeting of the minds ‘to defraud the Government.’”
United States v. LifePath Hospice, Inc., 2016 WL 5239863, at *8 (M.D. Fla. Sept. 22, 2016)
(citing Allison Engine Co., Inc. v. United States ex rel. Sanders, 553 U.S. 662, 672 (2008)).
Such a meeting of the minds could be evidenced by LabCorp’s knowledge that it may be
participating in an illegal referral network, coupled with its assent to HDL/S’s and the doctors’
illegal agreement, via its own continued participation. See United States ex rel. Decesar, 2011
WL 607390, at *7. The question, then, is whether this record reflects any dispute of fact as to an
illegal agreement between HDL/S and the doctors, and as to LabCorp’s continued participation
in their referral network with knowledge of their agreement. The Court finds that it does.
As discussed, the record reflects that HDL/S paid certain doctors P&H fees in exchange
for referring testing to HDL/S, such as one doctor has testified that she herself was paid. (Dkt.
No. 362-23 at 8.) There is also record evidence that LabCorp was aware that the doctors were
paid P&H fees, such as when Cigna notified LabCorp in 2011 of, as LabCorp described it, “a ton
of leakage to HDL” because specific doctors—whom LabCorp noted were “being paid by HDL a
handling fee between $15.00 and $25.00 and are unwilling to give this revenue stream up”—
were referring testing to out-of-network HDL/S instead of to in-network LabCorp. (Dkt. No. 370
at 2-3.) There is also record evidence that, nonetheless, LabCorp IOPs continued to draw blood
for doctors whom LabCorp knew were referring tests to HDL/S in exchange for P&H fees, such
as when LabCorp apparently continued to draw blood for HDL/S testing after a LabCorp senior
vice president flagged in September 2012 the potential “major compliance problem when the
doctor gets 25 bucks for a draw we do” because that “potentially puts them at primary risk and us

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also.” (Dkt. No. 369-1 at 2.) On the other hand, in August 2012 LabCorp noted that “when a
venipuncture fee is billed it includes the processing and handling of the specimen” and that
LabCorp’s compliance department is “not willing to participate in this scheme as we believe it
crosses the anti-kickback statutes.” (Dkt. No. 373-12 at 4.) From this record, therefore, there
remain material disputes of fact as to whether LabCorp assented to HDL/S’s referral scheme by
continuing to provide IOP blood draws for blood tested by HDL/S in exchange for its own
testing referrals.
LabCorp’s motion for summary judgment on Relators’ claim that it conspired to violate
the FCA with HDL/S is denied.
D.

HDL/S Claims in which the BlueWave jury rejected liability
LabCorp argues that the BlueWave, 9:14-0230-RMG jury determined that these same

claims were not violations of the AKS and, therefore, that Relators cannot here argue that these
claims do violate the AKS to underpin the allegation that violated the FCA. “Collateral estoppel
precludes relitigation of an issue decided previously in judicial or administrative proceedings
provided the party against whom the prior decision was asserted enjoyed a full and fair
opportunity to litigate that issue in an earlier proceeding.” In re McNallen, 62 F.3d 619, 624 (4th
Cir. 1995). The issue here is whether, when and on how many occasions LabCorp’s IOPs drew
blood while knowing that the blood would be tested by HDL/S and knowing that the doctors
received a kickback from HDL/S for referring the test. That issue was not decided by the jury in
BlueWave.
IV.

Conclusion
For the foregoing reasons, LabCorp’s motion for summary judgment (Dkt. No. 326) is

denied.
AND IT IS SO ORDERED.
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s/ Richard Mark Gergel
Richard Mark Gergel
United States District Judge
June 15, 2021
Charleston, South Carolina

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