Tuesday, October 3, 2023 | Back issues
Courthouse News Service Courthouse News Service

Blue Cross Accuses Lab of $5 Million Fraud

(CN) - A Massachusetts lab that lacked a valid license for clinical testing defrauded Blue Cross of $5 million by charging out-of-network rates, the insurer claims in court.

Blue Cross and Blue Shield of Massachusetts Inc. sued United Esoterics in Suffolk County Superior Court.

The insurer says that the multimillion-dollar scheme began in 2007 when the couple who own United Esoterics entered into billing contracts with at least nine Massachusetts doctors.

Though neither the owners nor their company held a valid clinical-laboratory-testing license, they falsely held United Esoterics out to Blue Cross as a clinical-testing laboratory and obtained an out-of-network provider number, according to the complaint.

"Instead, the defendants parasitically used the licenses that belonged to the doctors, but billed BCBS at substantially higher out-of-network rates, rather than the lower in-network rates of the doctors," the complaint states. "The fraudulent scheme generated millions of dollars in revenue for the defendants, some of which they used to pay kickbacks or 'profit sharing' to the doctors."

Blue Cross says it stopped paying the lab's invoices in 2013 when Massachusetts began an investigation into its possible licensing infraction.

One of the owners was sanctioned in 2013 and prohibited from running a lab for two years, according to the complaint.

Claiming to be owed more than $5 million, the insurance giant also seeks treble damages for fraud, negligence and unjust enrichment.

It is represented by Jeremy Sternberg with Holland & Knight in Boston.

Categories / Uncategorized

Read the Top 8

Sign up for the Top 8, a roundup of the day's top stories delivered directly to your inbox Monday through Friday.