Operation LabScam in the 1990s Recovered $800 Million

Operation LabScam in the 1990s Recovered $800 Million

Fraud Cases | Medicaid Fraud Cases

Several of the nation’s largest laboratories billed Medicaid and Medicare for millions of unneeded tests during the late 1980s and early 1990s. The labs used forms that seemed to package uncommon lab tests with commonly ordered blood panels. Doctors were tricked into thinking the additional (and unnecessary tests) were provided at no extra charge. In fact, these extra procedures were billed to Medicare and Medicaid.

The scam resulted in millions of dollars of unnecessary tests including: thyroid tests, gamma glutamyl transpeptidase (GGT), high-density and low-density lipoprotein (HDL and LDL), triglycerides, ferritin, blood indices and creatine.

According to Mochael F. Mangano’s (Principal Deputy Inspector General) testimony to the House Ways and Means Subcommittee on Oversight:

This project evolved from a 1992 case against National Health Laboratories involving “unbundling” of tests. Unbundling is the practice of running specimens through a single piece of automated multi-channel laboratory equipment and then billing separately for each component test. The frequency of testing for the Medicare population increased 96 percent from 1986 to 1993, while the population increased by 14 percent.

The Consequences


In 1996 and 1997, the government settled with several large labs for $800 million.

SmithKline Beecham Clinical Laboratories (SBCL) paid $325 million.

LabCorp (a company formed from Roche Biomedial Laboratories, Inc., Allied Clincial Laboratories and National Health Laboratories, Inc) paid $187 million.

Damon Clinical Laboratories, Inc. (owned by Corning at the time) paid $119 million. Two other labs owned by Corning also settled.

Sources: Alabama Attorney General News
US Attorney General Press Release
Ways and Means Oversite Subcommittee Testimony