LabCorp facing lawsuit, Senate investigation over alleged fraud

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BURLINGTON, N.C. – Alamance County’s largest private employer is facing a federal lawsuit and a Senate investigation in regards to alleged Medicare and Medicaid fraud.

Two senators, Chuck Grassley of Iowa and Max Baucus of Montana, are investigating five companies, including LabCorp. LabCorp’s part in the investigation is whether the company overcharged Medicare and Medicaid for its testing services.

Read Senate investigation news release

Read Senate letter sent to LabCorp CEO David King

The company is also in the middle of a federal lawsuit in New York, in which a rival company claims LabCorp violated an anti-kickback law by offering discounts to insurance companies in exchange for business.

LabCorp did not respond to any request for comment Monday through all forms of communication. They said they would have a response by Thursday, when the federal court in New York requires a response to the lawsuit.

This is not the first time the company has been accused of Medicare or Medicaid fraud. The company paid $187 million in civil and criminal fines for subsidiary Roche Biomedical in 1996. The following year, it paid the government $700,000 to settle fraud claims in a separate investigation.

LabCorp was formed in 1995 and employs more than 3,000 people. It contributes $115 million in county tax revenue annually, more than any other entity.

“We could not ask for anything more from a corporate citizen,” said Craig Honeycutt, Alamance County manager.

Zack Touloupas, owner of Zack’s Hot Dogs, said LabCorp’s opening transformed the entire city.

“We made the shift from retail to ghost town to a lot of offices and institutional-type businesses now,” Touloupas said.

As a result, Touloupas said the city would suffer greatly if something big happened to the company.

“Most of the businesses down here would probably suffer. We would suffer the most, too, because they make up a large part of our business. We’d be back to a ghost town,” Touloupas said.

Only the Alamance-Burlington School System employs more people in the county than LabCorp.