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Corning Clinical Laboratories, a New York-based corporation, reported revenues of $1.6 billion in 1995. The government is now going to take a slice of that pie in the largest federal fraud settlement to date. The fine was not levied as a result of Corning’s own malfeasance but as a result of the misdeeds of a company it purchased, Damon Clinical Labs.
The investigation into the activities of Damon began with a Federal whistle blower’s action. The case marks the largest such settlements ever paid to those individuals who reported the illegal conduct.
According to a plea agreement, Damon has admitted it regrouped blood tests in such a way that doctors would order more tests than were clinically necessary. This action was taken in response to fee reductions Medicare adopted in 1988 and 1989. In such cases, Damon Clinical would bill the government for the entire panel but would not let the physicians know that this was how it was being handled. The result of the test “bundling” was nearly $40 million in excess payments.
Paying fines to the government is not new to Corning. Recently, a New Jersey subsidiary of Corning, Inc., and Unilab Corp. of Tarzana, California, agreed to pay $11 million to settle charges related to the overbilling of about 700,000 blood tests. Another payment, this time $6.7 million, was paid on behalf of Bioran Medical Laboratories of Cambridge, purchased by Corning in 1994, to settle similar charges.
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