LabCorp Can Sue Physician to Collect $117K Worth of “Pass-Through” Charges for Uninsured Patients

Case: Labs like LabCorp typically enter “pass-through” arrangements with physicians covering patients that lack insurance or are otherwise self-pay. The way it works: The lab bills the physician who ordered the results. The physician then pays the bill and seeks reimbursement from the patient. Thus, the charges “pass through” the physician to the patient. LabCorp contends that this was the case with a New Mexico physician liable for $117,210 of unpaid charges on a pair of accounts. But the physician disagreed, claiming that the accounts were set up solely to facilitate billing for insured patients and that he had never agreed to pay for any services rendered to uninsured patients. So, he asked the federal court to dismiss the claim.

Significance: The court refused. Even though the agreement didn’t specifically mention it, the court concluded that LabCorp had presented evidence showing that the physician’s open accounts amounted to a pass-through arrangement. Specifically, LabCorp contended that it told the physician as part of its standard practice in setting up accounts that account holders are held liable for any charges not paid by insurance. It also claimed it performed “in-services” to review the physician’s billing terms the way it does will all account holders. The physician also knew that pass-through arrangements were a customary practice in the industry. While not ruling on whether all of this proved that there was a pass-through arrangement in place, the court concluded that the evidence created enough of a question to warrant a trial.

[Lab. Corp. of America v. McMahon, 2020 U.S. Dist. LEXIS 227956, 2020 WL 7125249]