37 Insurers Sue SmithKline Over Billing

Thirty-seven major health insurers, including Blue Cross of California, have sued SmithKline Beecham, accusing the company’s clinical laboratory division of overbilling them by hundreds of millions of dollars. The lawsuit, filed in U.S. District Court in Hartford, Conn., also charges SmithKline with violating a federal racketeering law that allows plaintiffs to collect triple damages if their claims are upheld. The plaintiffs represent 37% of the nation’s private health insurance industry. Industry officials familiar with the suit, who spoke on condition of anonymity, said the companies hope to collect from $1.2 billion to $1.5 billion. SmithKline’s laboratory division owns and operates one of the nation’s largest chains of clinical labs. The lawsuit accuses SmithKline of exploiting the health-care payment system in five ways, including billing for tests physicians did not order or intend to order, billing twice for the same procedure and billing for more expensive tests than ordered. London-based SmithKline, which has its U.S. headquarters in Philadelphia, denied committing any fraud and said the claims are “grossly exaggerated, and the legal basis for recovery is highly questionable.” Aetna Life Insurance Co., New York Life Insurance Co., Humana Inc. and Prudential Insurance Co. are also among the plaintiffs.