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U.S. Attorney Files Civil Fraud Suit Against LabQ And Its CEO For Fraudulently Billing COVID-19 Testing

The following describes a pending government action that has been formally brought by a government agency but has not yet been resolved. We are providing a summary of the governments allegations, which have not yet been proven.

On June 13, 2024, Damian Williams, the United States Attorney for the Southern District of New York, Elysia Doherty, Assistant Special Agent in Charge of the U.S. Department of Health and Human Services, Office of Inspector General (“HHS-OIG”), and James Smith, the Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced that the United States has filed a Complaint against LABQ CLINICAL DIAGNOSTICS, LLC (“LABQ”); COMMUNITY MOBILE TESTING, INC. (“CMT”); DART MEDICAL LABORATORY, INC. (“DART MEDICAL”); and their CEO, MOSHE LANDAU (collectively, the “Defendants”), alleging that the Defendants fraudulently billed the federal program that reimbursed health care providers for COVID-19 testing provided to uninsured persons (the “Uninsured Program”).  The lawsuit seeks damages and civil penalties under the False Claims Act as well as a recovery of government funds under the common law. 

Prior to seeking reimbursement for COVID-19 testing services from the Uninsured Program, testing providers were required to attest to the Health Services and Resources Administration (“HRSA”), a component agency within the U.S. Department of Health and Human Services (“HHS”), that they had confirmed their patients were uninsured and that no one else would pay for the cost of the COVID-19 testing.  However, as alleged in the Complaint, the Defendants frequently knowingly submitted, or caused to be submitted, claims to the Uninsured Program for COVID-19 testing in instances when the cost of the COVID-19 testing had been (or would be) reimbursed by another source and/or the COVID-19 testing had been provided to persons who had health coverage on the relevant date of the service.  The Complaint alleges that the Defendants’ fraudulent scheme drained limited funds appropriated by Congress to cover COVID-19 testing costs for uninsured persons.

The following allegations are based on the Complaint filed in Manhattan federal court on June 13, 2024: 

During the COVID-19 pandemic, LABQ provided COVID-19 testing for school districts and nursing homes, as well as to walk-up patients at numerous LABQ-branded vans and tents located on public streets in New York City.  LABQ and DART MEDICAL received approximately $130 million from the Uninsured Program for COVID-19 Testing.  In direct contravention of their promises and attestations to HRSA, however, the Defendants frequently submitted, or caused to be submitted, ineligible and fraudulent claims to the Uninsured Program for COVID-19 testing in instances when the cost of the COVID-19 testing had been (or would be) reimbursed by another source and/or the COVID-19 testing had been provided to persons who had health coverage on the relevant date of the service.

More specifically, the Defendants engaged in the following schemes: LABQ, DART MEDICAL, and LANDAU double-billed the Uninsured Program and other health care programs and private institutions for the same COVID-19 testing; LABQ and CMT employees frequently told patients and customers, in sum and substance, that LABQ did not need insurance information and, in instances when LABQ possessed patient insurance information, LABQ, DART MEDICAL, and LANDAU often submitted claims (or caused claims to be submitted) to the Uninsured Program for those patients; and in clear violation of the Uninsured Program’s Terms and Conditions, LABQ, LANDAU, and DART MEDICAL, as a matter of policy, sought reimbursement (or caused others to seek reimbursement) from the Uninsured Program for COVID-19 tests provided to people with health care coverage in instances where LABQ, LANDAU, and DART MEDICAL believed that the patient’s insurer might deny LABQ or DART MEDICAL’s claim for reimbursement.

As a result of the Defendants’ fraudulent conduct, the Uninsured Program paid tens of millions of dollars to LABQ and DART MEDICAL to which they were not entitled.  Further, at LANDAU’s direction, LABQ, CMT, and DART MEDICAL disbursed a significant portion of these funds to LANDAU’s personal bank accounts.

Through these practices, the Defendants improperly obtained tens of millions of dollars from the Uninsured Program in violation of both the False Claims Act and the common law.