BCBS sues COVID testing lab again


Another Blue Cross and Blue Shield insurer sued GS Labs over its COVID-19 tests on Thursday, alleging the national testing facility forced commercially insured customers to take unnecessary, expensive tests to fleece Premera Blue Cross out of $26 million.

The suit, filed in the U.S. District Court for the Western District of Washington at Seattle, represents the second complaint against Omaha, Nebraska-based testing company. In July, BCBS Kansas City accused GS Labs of attempting to profit from the public health crisis by upcharging the not-for-profit insurer $9.2 million for COVID-19 tests. GS Labs responded by counter-suing BCBS Kansas City, accusing the insurer of “legal bullying” by filing a surprise lawsuit intended to stiff the company out of paying for some 34,600 member claims. The case is pending.

At the time, the AHIP insurance lobbying group said BCBS Kansas City’s suit represented the first insurer complaint in the nation. The advocacy group said it was not aware of any other lawsuits against testing providers other than GS Labs, which also faces questions from state regulators. GS Labs said its prices reflect the more than $100 million its owners have invested to build its testing facilities, a spokesperson wrote in an email. The company is part-owned by Gabriel Sullivan, who faces an ongoing suit from a previous healthcare employer that accuses him of inappropriately billing insurers. GS Labs said it conducts “one out of every four or five” COVID tests in Washington daily, the spokesperson wrote.

“Premera is making record margins and accumulating record reserves in the billions of dollars and now wants to shut down one of the largest providers of COVID testing in the state,” the spokesperson wrote. “While Big Insurance feels compelled to put communities at risk with a dangerous lawsuit like this, we will not be deterred.”

Like BCBS Kansas City, Premera Blue Cross seeks a declaratory judgment that prevents the insurer from having to pay 80,000 claims related to coronavirus testing done by GS Labs, which operates 27 locations across 13 states. The Coronavirus Aid, Relief, and Economic Security Act requires insurers to cover testing without cost-sharing during the public health emergency, and instruct insurers to pay out-of-network providers their listed cash price. The law is silent on how much a health plan must pay if it cannot agree on a negotiated rate with a provider, however.

GS Labs charges about 10 times what Medicare reimburses clinicians for administering a COVID-19 antigen test, and twice as much for administering more advanced PCR tests, the complaint says. Fifteen percent of hospitals in the U.S. charge similar rates, an April analysis from the Kaiser Family Foundation found. In June, the insurance lobbying group AHIP reported that insurers across the nation are being “price gouged” by out-of-network COVID-19 testing centers, which are performing more diagnostic, antibody and antigen tests than ever. Meanwhile, GS Labs accepted cash payments from consumers for up to 70% of what it charged insurers.

In addition to the “extraordinarily high rate it demands” from insurers, GS Labs also performed multiple, unnecessary tests on a single individual, as a means to submit as many claims as possible to insurers, the complaint said. For commercially-insured individuals to book an online appointment, they must consent to receive a rapid antibody, antigen and PCR test, the lawsuit said. Meanwhile, cash pay patients must select a specific test to book an appointment.

“Because GS Labs buries this information in a “clickwrap” agreement, patients often are not aware that they have agreed to this unusual term,” the lawsuit says.

The insurer also contends that GS Labs’ delay in processing testing has exacerbated the public health crisis. In one instance, the company did not tell consumers their results for two weeks, leading to an individual who tested positive to “walk around with COVID for a week,” potentially spreading the virus, according to a report in KCTV.

Premera is not the only group questioning the prices of GS Labs, which is owned by Omaha, Nebraska-based City Ventures developer.

In December, the Kansas Insurance Department began investigating a GS Labs facility that was charging $1,000 for tests, which the state’s general counsel said was higher-than-average.