GS Labs Files Lawsuit to Protect the Public from Medica's Alleged Refusal To Pay For COVID-19 Rapid Tests

MINNEAPOLIS, Oct. 29, 2021 /PRNewswire/ -- GS Labs, a leading provider of COVID-19 rapid tests in Minnesota and across the United States, has filed a federal lawsuit against Medica, a multi-billion-dollar health insurance giant which insures more than 1 million customers in Minnesota and 10 other states. The filing explains that Medica has willfully violated the federal law enacted by Congress to respond to COVID-19, known as the "CARES Act," by ignoring the clear directive that health insurance companies "shall reimburse" providers for diagnostic testing.

The lawsuit, filed in federal court in Minnesota, accuses Medica of having "acted with deliberate disregard for the rights and safety of others in the midst of this national and global pandemic crisis" and having shown "deliberate disregard – in addition to contempt – for the rights and safety of its own insureds who have needed, currently need, and will need in the future the COVID-19 diagnostic testing services GS Labs has provided."

To date, Medica has failed to pay in full more than 30,000 outstanding insurance claims with the insurer paying in full only about 8 percent of GS Labs' current claims. This failure constitutes nearly $10 million in unpaid claims. GS Labs has provided more than 20,000 patient-visits to Medica insureds, with more than 20 percent of Medica patients returning for subsequent tests. GS Labs has not billed a single Medica patient for their tests.

"Medica's deliberate actions have not only harmed GS Labs, it has made testing harder to get for Minnesotans, because it continues to limit the private sector's efforts to deliver testing to communities that need it," said Kirk Thompson, a partner with GS Labs. "So far, our testing has identified more than 13,000 Minnesotans positive for COVID-19. That's the equivalent a town the size of Rogers, MN being given critical, life-saving medical information to help prevent the spread of a virus that has killed more than 700,000 Americans."

GS Labs' entrepreneur-owners stepped up last year amid a national health crisis, investing $100 million to build and staff a national testing business, including establishing testing operations in more than 50 locations, hiring thousands of essential workers, and developing infrastructure to handle internal billing, communications, and a nurse hotline for patients in need of information. GS Labs' state-of-the-art technology platform allows each testing site to serve as many as 1,000 patients per day, seven days a week, 8:00 AM to 8:00 PM, including at locations in Minneapolis, Eagan, Minnetonka, Blaine, Maplewood and the Mall of America.

In September, GS Labs accounted for more than 22% of the rapid COVID-19 tests conducted in the state. The company's "same hour" testing service lets patients book within 15 minutes of a proposed appointment and receive accurate rapid results in as little as 20 minutes. Given COVID-19's extremely high rate of infection, this timeliness is of the essence and saves lives.

The CARES Act makes clear that insurance carriers must pay for COVID-19 testing for insured members. Section 3202(a) states: "If the health plan or issuer does not have a negotiated rate with such provider, such plan or issuer shall reimburse the provider in an amount that equals the cash price for such service as listed by the provider on a public internet website, or such plan or issuer may negotiate a rate with such provider for less than such cash price."

"The law could not be more straightforward," said Thompson. "As anyone who's ever had an insurance claim rejected will understand, this is a typical Big Insurance tactic. They want to force labs like ours out of business, so they have paid us nothing while requesting mountains of information. It's all delay, delay, delay, with no thought given to the people who need COVID-19 tests because they need to know their health status."

According to a study conducted by America's Health Insurance Plans (AHIP), 54% of out-of-network labs like GS Labs charge between $185 to more than $400 per test. Other insurers nationwide have agreed to pay the GS Labs $380 posted cash price or a lower negotiated rate for various COVID-19 tests. A recent survey by Kaiser Family Foundation found that about 20 percent of COVID-19 diagnostic tests have a cash price of over $300.

"We have tested more than 750,000 Americans in multiple states, providing critical medical information to hundreds of thousands of families and millions of loved ones and co-workers," said Thompson. "Rather than obey federal law and pay us or negotiate a lower rate, some insurers have falsely accused us of price-gouging. Those accusations are meant to manipulate the public's perception of the cost to provide this critical service and it ignores the fact that over half of out-of-network labs charge similar rates."

GS Labs currently operates testing sites in Minnesota, Colorado, Iowa, Missouri, Nebraska, Oregon and Washington. The company has continued to open new facilities in response to requests for additional testing and to help fight the deadly Delta variant, which has spiked in Minnesota and other states.

"Throughout the pandemic, our team has stood by our commitment to help communities in crisis. We very much view GS Labs as providing a public service," said Thompson. "Every COVID rapid test we do provides an individual, a family or a business with vital medical information. Every sick person who quarantines makes everyone else safer. Every person who tests negative has the ability to keep Minnesota economy moving.

"This conduct by Medica is mystifying. They earned $4.5 billion in revenue last year, yet Medica leadership appears deadset on strangling testing laboratories out of business. That hurts the company's insureds and hurts every Minnesotan."

CONTACT: David Leibowitz, 602.317.1414, [email protected]

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SOURCE GS Labs