San Diego Clinical Laboratories File Lawsuit Against Federal Government

SAN DIEGO- LAWFUEL – Legal Announcements –A Medicare Demonstration Project slated for the San Diego-Carlsbad-San Marcos region threatens to irreparably harm vital laboratory testing services for thousands of Medicare beneficiaries if it is allowed to move forward as expected on February 15, 2008, according to a complaint filed against federal regulators today in federal court.

“The three-year Demonstration Project singles-out the San Diego region for testing of a new competitive bidding program that if implemented will force many small community laboratories out of business and will force systems like Sharp HealthCare and Scripps Health to refuse service to non-hospital patients who have come to rely on their labs for ongoing testing,” said Patric Hooper of Hooper, Lundy & Bookman, Inc.

Mr. Hooper filed the complaint on behalf of Sharp HealthCare, Scripps Health and independently-owned Internist Laboratory of Oceanside. “Rather than creating competition, this Demonstration Project will result in fewer labs, less competition and increases in Medicare’s laboratory expenditures. The ramifications to Medicare beneficiaries, their physicians and the labs that currently serve them could be devastating,” he said.

The plaintiffs argue, in part, that the federal Department of Health and Human Services:

Failed to follow a legally required rulemaking process by failing to hold appropriate public hearings and failing to allow Medicare recipients, physicians and others to provide input into the process.
Failed to incorporate protections for small businesses, as required by law. The Demonstration Project requires all labs to perform all 303 tests or obtain the financial and bidding cooperation of reference laboratories, which are now considered competitors.
Has established a program that “threatens to cause severe and irreparable injury to plaintiffs Internist, Sharp, and Scripps, as well as to their respective employees and patients.”
Has included many policies that are arbitrary.
“The Department of Health and Human Services Secretary has overstepped its bounds and by doing so threatens to cause havoc to the clinical laboratory landscape of San Diego, Carlsbad, and San Marcos,” said Mr. Hooper. “We are respectfully asking the Court to stop the project in its tracks and allow the public a chance to weigh-in on this ill-conceived government mandate.”

Internist Laboratory is a family-owned business with eight employees and roughly 65 percent of the company’s business is derived from Medicare beneficiary lab tests. If Internist is not chosen as a “winning” laboratory, it is a matter of time before it will close down.

“This is devastating not only for the fact that the government is in essence closing Internist’s doors for good, but also for the hundreds of elderly and special-needs patients that depend on it,” said Mr. Hooper. “As an example of its community roots, Internist was the only independent commercial laboratory performing critical laboratory services during the recent wildfires.”

Sharp HealthCare will most likely have to close down some local drawing stations if it is not a “winning” laboratory. This includes the likelihood of sending out its laboratory tests for urgent care patients, potentially causing a significant and dangerous delay in critical testing results. Like Sharp, Scripps Health may be forced to discontinue completely, or significantly decrease, furnishing laboratory services to non-hospital patients.

The lawsuit was filed in the U.S. District Court for the Southern District of California.

About Hooper, Lundy & Bookman, Inc.: Hooper, Lundy & Bookman’s lawyers are regularly engaged in complex litigation involving hospitals and health systems, laboratories and other health care providers. The firm’s regulatory department regularly assists provider clients with litigation, arbitration and mediation services that have resulted in numerous favorable judgments and new case law. With clients in 47 states and offices in Los Angeles, San Francisco and San Diego, the firm is the largest law firm in the country dedicated solely to the representation of health care providers. For more information, visit the firm’s website at

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