LabQ: Nursing Home Testing and Two Bills for the Same Test

The LabQ Uninsured Program lawsuit alleges that nursing home testing generated federal claims for insured people and for tests someone else had already paid for. The Justice Department’s June 13, 2024 announcement describes a laboratory collecting from nursing home customers while also telling the federal program that no other payer would cover those tests. If you worked with the contracts, insurance information or billing, you may recognize the gap between what the customer paid and what the government was told.

According to the Justice Department, LabQ and Dart Medical received approximately $130 million in Uninsured Program reimbursements across a testing business serving nursing homes, schools and walk-up patients. The fund was meant for people without health care coverage. The government alleged that LabQ depleted those funds with claims for insured patients and tests already paid for.

Two whistleblower suits preceded the government’s case. The United States joined parts of those suits and filed its own complaint in Manhattan federal court against LabQ Clinical Diagnostics, Community Mobile Testing, Dart Medical Laboratory and their chief executive.

How Nursing Home Testing Reached the Uninsured Program

The government complaint describes how LabQ expanded from blood testing for nursing home residents into COVID testing, connecting facility contracts to a separate federal fund for people without health coverage.

The payment arrangement matters in nursing home lab billing fraud. Under Medicare’s usual Part A skilled nursing payment, laboratory services generally sit inside the facility’s bundled payment, and the facility pays an outside supplier under its contract. Here, the government alleged that LabQ sought payment from an emergency program whose eligibility depended on the tested person’s insurance and whether another payer would cover the test.

The complaint attached to the government’s announcement describes three testing channels. Private institutional customers paid LabQ a fixed price per test. Referral customers arranged testing at no cost to themselves, with LabQ seeking payment from insurers or the Uninsured Program. Walk-up patients supplied specimens at LabQ-branded vans and tents in New York City.

According to the complaint, Community Mobile Testing operated the mobile sites, LabQ performed the tests, and LabQ employees used Dart Medical’s provider identifier to bill federal programs. Uninsured Program payments went into Dart Medical’s bank accounts. The testing brand and the company receiving payment were different parts of the same operation.

Billing the Nursing Home and the Uninsured Program for the Same Test

The government alleged that LabQ collected from both the Uninsured Program and at least four New York City skilled nursing facilities. The complaint puts its frequent private-client charges at $100 to $150 per test. The alleged second bill went to a program that required LabQ to confirm that nobody else would pay.

One example follows nursing home testing from a customer invoice to a federal claim. LabQ invoiced the facilities’ management company for November 2020 tests. The government alleged that the management company made payments totaling over $89,000 that covered those and other tests before LabQ and Dart Medical submitted the federal claims in April 2021. Yet the patient roster represented that no other payer would reimburse the testing.

The complaint also quotes the chief executive acknowledging during government questioning that LabQ submitted Uninsured Program claims for the same testing a skilled nursing facility had paid for. The government’s account connects the contract, invoice, customer payment and federal claim to the same service.

Other alleged duplicates involved private insurers, Medicare and Medicaid, and repeat claims to the Uninsured Program itself. The complaint describes a billing employee warning the chief executive that tests paid by private insurance were systematically billed again to the federal fund. It alleges that LabQ failed to refund the affected payments after learning about the overlap.

Free Testing in Exchange for Government-Paid Business

A separate whistleblower complaint alleged that free nursing home surveillance testing brought LabQ government-paid business. It described the nursing home owner’s family connection to the laboratory’s chief executive and the bargain behind the testing:

The whistleblower alleged that LabQ tested nursing home personnel twice a week from approximately May 2020 through July 2021. Those employees had private insurance information that LabQ either failed to collect or collected and ignored, according to the complaint. The nursing home avoided the testing expense while LabQ billed the Uninsured Program.

The broader exchange of discounted services for referrals also appeared in the Diagnostic Labs case. There, the government alleged that the supplier charged nursing homes below-cost rates for Part A work in exchange for Medicare Part B and Medi-Cal referrals. The recurring business question is what a cheap service buys the laboratory access to.

Insured Patients Billed as Uninsured

The Uninsured Program required providers to confirm that patients lacked health care coverage when tested and that no other payer would reimburse the service. Providers also agreed to return federal payments duplicated by another source. The government alleged that LabQ’s intake and billing practices repeatedly contradicted those promises.

The complaint describes a Brooklyn nursing home employee whose technicians never asked for her insurance information. She had coverage, but LabQ allegedly billed the Uninsured Program for 28 tests provided to her.

The government also alleged that patients supplied insurance information and the federal claims still described them as uninsured. Its complaint describes an employee warning that insurance information on intake forms was missing from the billing database.

The intake form mattered to the program’s own checks, too. According to the complaint, the Uninsured Program’s contractor, Optum, checked insurance eligibility for patients whose Social Security Numbers appeared on the submitted rosters. The government alleged that LabQ’s intake forms had no field for those numbers, hampering those checks. It also alleged that LabQ sometimes billed the fund before using its own insurance-discovery service.

The whistleblower complaint went further on intake: it alleged that LabQ and Community Mobile Testing staff sometimes refused insurance information when offered and told patients to indicate falsely that they lacked coverage. These allegations put the instruction at the testing site alongside the later claim. The empty field had a history.

When an Insurer Refused to Pay

The government alleged that LabQ treated an insurer’s refusal to pay as a reason to charge the Uninsured Program. Its complaint describes a union health plan declining to cover mandated surveillance testing for nursing home employees. LabQ and Dart Medical then allegedly billed the Uninsured Program for testing staff who had coverage through that plan.

According to the complaint, a billing employee later told the chief executive that the Uninsured Program was reversing payments because it had found the patients’ insurance. LabQ nevertheless continued submitting claims for insured patients. The program’s eligibility turned on whether the patient had health coverage, not whether that coverage would pay LabQ’s particular bill.

What the Lab’s Own Reports Showed

The government alleged that LabQ’s internal reports exposed how much business it was directing to the Uninsured Program. The complaint says the chief executive received an analysis classifying 75% of tests across referral clients as testing for uninsured patients, along with other reports comparing federal claims and private-insurer claims.

The same complaint describes a change after the Uninsured Program stopped accepting testing claims for lack of funding in March 2022. LabQ began telling school customers that it would continue testing only for groups in which the large majority supplied insurance information. The information allegedly treated as optional while the federal fund paid became important when the laboratory needed another payer.

When the Test and the Claim No Longer Match

The whistleblower’s allegations extended beyond who paid for a test to what specimen the laboratory actually tested. The complaint alleged that lost specimens could be replaced with fake samples and billed to the Uninsured Program. It also described an instruction to retest a stored specimen previously reported as negative in place of a lost specimen, so the test could be billed.

The same whistleblower complaint alleged altered turnaround records:

The whistleblower alleged that LabQ claimed rapid-testing payment even when the results were late.

Provista Health illustrates a different alleged use of nursing home COVID testing access. The government alleged that the laboratory business used that access to bill Medicare for unnecessary respiratory panels, unrequested tests and tests never performed. The court entered judgments against the defendants after they failed to defend the case.

What Evidence Is Needed to Prove Fraud?

The evidence needs to connect the testing arrangement to the claim and payment, and show who knew about the discrepancy. We work with insiders to make those connections, whether you know what the facility paid, what patients said about insurance or why a paid test was billed again.

LabQ’s alleged internal warnings show why the link between the records and management’s decisions matters. We bring that operational knowledge together with healthcare fraud whistleblower lawyers who understand laboratory billing.

A whistleblower case under the False Claims Act can pay a whistleblower reward of 15% to 30% of what the government recovers.

You Know How the Test Was Billed

If you saw a test billed twice or an insured patient billed as uninsured, talk with our whistleblower experts about what happened. We work beside you to build the case around the testing, the payment and the decisions behind them, and bring in healthcare fraud whistleblower lawyers who know laboratory billing. We stay beside you through the process, working to turn your firsthand knowledge into your strongest healthcare fraud whistleblower case.