Shareholders Sue Missouri Hospitals for Alleged Lab Billing Ripoff

Case: A new shareholder lawsuit targets the CEO and other individuals at a Missouri 10-hospital group called HMC Hospitals for allegedly running a $90 million lab billing fraud scheme out of the facilities. The suit claims that HMC hospitals submitted claims for lab work ostensibly performed for pain and detoxification clinics but that was actually done at other labs. By leveraging the hospitals’ status as Medicare and Medicaid critical access rural hospitals, the schemers were able to command higher rates than the labs that actually performed the tests. Those other labs were then paid a portion of the reimbursement as a kickback. Significance: This case is the most recent example of the growing role the private sector in targeting lab fraud. Of course, whistleblowers have long represented the private arm of the enforcement. But this is lawsuit is driven by corporate rather than regulatory concerns. The plaintiffs aren’t whistleblowers acting as private attorneys general but as shareholders of the entity that owns the 10 HMC hospitals suing on behalf of themselves and the other shareholders.