LabCorp COO Threatened Staff Who Didn't Assist Kickback Scheme, Suit Claims
If you are the manager of a healthcare company engaged in a kickback scheme that defrauds Medicare, you might be well advised not to announce at a company dinner that any employee not on board with the illegal scheme should resign.
That's what allegedly happened at LabCorp (LH), the giant medical testing company whose delivery lockboxes you often see outside doctors' offices.
In a lawsuit filed in a New York federal court, plaintiff Andrew Baker, former CEO of Unilab, a rival testing company, alleges that LabCorp entered a 10-year contract with UnitedHealthCare (UNH) in 2006 in which LabCorp would provide United with cut-rate lab testing services if United required the doctors in its reimbursement network to refer all their Medicare patients to LabCorp. (Baker is the same person who brought a similar case against Quest Diagnostics.) By doing so, LabCorp ramped up its revenues from Medicare to nearly $1 billion a year, the suit claims:
- LabCorp Medicare revenues
- 2007: $740 million
- 2008: $790 million
- 2009: $890 million
- 2010: $970 million
LabCorp's management felt their entire company depended on the deal, which the suit claims amounts to a kickback scheme to rook taxpayers by paying an illegal inducement to engage in unfair pricing. At a LabCorp "National Awards Dinner" at the Four Seasons Hotel in Philadelphia in late 2007 or early 2008, the suit alleges, former COO Donald Hardison stood up and gave a speech, to the effect that:
If LabCorp did not capitalize on the opportunity provided by UnitedHealthCare to obtain the Medicare business, LabCorp would lose its shirt and would not even be able to turn on the lights. He advised the group that anybody who did not understand this should find another job.Other executives repeated this line of thought at other corporate dinners, the suit claims. LabCorp has yet to file a response.
Needless to say, one doesn't have to be a genius in management strategy to understand that threatening to fire anyone in your company who doesn't go along with an unfair pricing scheme that victimizes taxpayers is possibly the very best way to create whistleblower dissidents among your audience.
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