Lawsuit Alleges Labcorp Fails to Disclose High List Prices Charged to Patients With Denied Insurance Coverage

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Laboratory Corporation of America Holdings (Labcorp) has been hit with a proposed class action over its alleged failure to disclose the prices that patients will be billed in the event their insurance coverage for lab tests is denied.

The 45-page lawsuit alleges that although Labcorp’s patient acknowledgment form denotes a “Health Plan Allowed Rate” that’s represented as an estimate of a patient’s financial responsibility for the company’s services, patients are not told that they may be billed “many multiples (frequently more than ten times greater) than the disclosed amount.”

The suit contends that Labcorp’s list prices, i.e., the amounts charged to patients who lack insurance, are excessive and do not reflect market rates. Moreover, the lawsuit alleges defendant’s practice of disclosing to patients low negotiated insurance rates for its services and then “surprising” them with much higher list prices should their insurance deny coverage is misleading and amounts to a bait-and-switch scheme.

“Labcorp baits patients with illusory estimates of their responsibility, then switches after the fact to charge them Labcorp’s arbitrary list prices,” the complaint claims.

The lawsuit explains that Labcorp’s diagnostics business segment operates as an independent clinical laboratory business that offers “a comprehensive menu of frequently requested and specialty testing.” According to the case, the prices Labcorp charges third party payors, such as insurance companies, and patients for its tests are vastly different.

“For instance,” the complaint says, “the list price Labcorp charged [one of the plaintiffs] for the Vitamin D test ($292) was more than fifteen times what it would have been paid by his insurer ($18.93).”

The lawsuit alleges Labcorp’s list prices “grossly exceed costs,” and are often 10 times the negotiated rates paid by insurers and disclosed to patients in the company’s patient acknowledgment form.

Although Labcorp is capable of disclosing its list prices to patients and securing their consent to pay the allegedly inflated rates prior to a procedure, the company does not do so, the suit says. For Medicare patients whose coverage is expected to be denied, Labcorp is required by law to disclose their estimated charges. Other patients, however, are never told how much they are responsible for paying if their insurance is denied, the lawsuit alleges. Absent a “meeting of the minds” with regard to price, Labcorp is limited to charging only the “health plan allowed rate” disclosed on the patient acknowledgment form, the suit argues.

According to the case, when a patient refuses to pay the exorbitant rate they’re billed, Labcorp initiates “a host of aggressive and unlawful collection efforts.” Given the fact that a patient’s lab tests have already been performed, they have no choice but to pay the “colossal bills” or be subject to Labcorp’s collection efforts, which include barring patients from future clinical testing services and threatening to send their debts to an outside collection or credit rating agency, the lawsuit says.

The plaintiffs are Nevada and Florida residents whose insurers allegedly denied coverage for their Labcorp tests. While one plaintiff was told that his financial responsibility based on his health plan totaled $18.93 for a Vitamin D test, Labcorp billed him the $292 list price for the test, the case says. The other plaintiff was provided “allowed rate[s]” of $44.60 and $65.27 for two sets of tests but was billed $335 and $650, respectively, for the tests, according to the complaint.

The plaintiffs look to represent Nevada and Florida residents who signed a patient acknowledgment form disclosing the “Estimated Charges” for lab services and were billed for those services a patient list price that exceeded the disclosed “Health Plan Allowed Rate.”

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