Blue Cross and Blue Shield of Minnesota Files Lawsuit Against GS Labs

EAGAN, Minn. (March 1, 2022) — Blue Cross and Blue Shield of Minnesota (Blue Cross) is taking legal action against COVID-19 testing laboratory GS Labs, LLC (GS Labs) to recover more than $10 million in overpayments made since the start of the pandemic.

The complaint, which was filed today in the U.S. District Court of Minnesota, alleges that GS Labs committed fraud against Blue Cross by submitting tens of thousands of claims using inflated cash prices over the past year. 

According to the Coronavirus Aid, Relief, and Economic Security (CARES) Act, in the absence of a contractual payment agreement, each COVID-19 testing provider is required to post specific cash prices on their public website, which insurers are then required to pay. Blue Cross alleges that GS Labs consistently and intentionally posted inflated cash prices on their public website in order to charge significantly larger amounts to Blue Cross than what it was willing to accept from individual cash-paying customers.

Blue Cross billing data shows that GS Labs consistently charged more than five times the median market rate for its most commonly administered COVID-19 diagnostic test. Additionally, GS Labs embarked on a pattern and practice of administering additional tests for the sole purpose of increasing the total amount charged to Blue Cross.

“It is our claim that GS Labs intentionally disregarded and misinterpreted federal guidelines for the sole purpose of maximizing profits during a public health emergency,” said Scott Lynch, senior vice president of pharmacy and chief legal officer at Blue Cross and Blue Shield of Minnesota. “After months of attempts at good-faith negotiations, we were unable to reach an agreement with GS Labs that would put in place appropriate COVID-19 testing practices at a fair price. It’s egregious price-gouging like this that ultimately drives up the cost of health care for everyone.”

As the state’s largest non-profit health plan, Blue Cross remains committed to ensuring that all of its members have access to COVID-19 testing, treatment and vaccines. Medically necessary and appropriate FDA-authorized COVID-19 tests will continue to be covered at no cost to the member when ordered or administered by a licensed health care professional. At-home rapid tests are also covered at no cost for members who have health insurance either through their employer or the individual market.

Since the start of the pandemic, Blue Cross has paid and processed claims for more than 3.5 million COVID-19 tests administered by thousands of different providers in Minnesota and across the country. 

Blue Cross is represented in this lawsuit by Robins Kaplan LLP. To learn more about coverage for COVID-19 testing and care, visit www.bluecrossmn.com/covid. For more on what Blue Cross is doing to improve the sustainability of health care, visit www.bluecrossmn.com/sustainability.