Private COVID lab created headaches for Minnesota consumers, health officials

GS Labs, Bloomington, Minnesota
A GS Labs testing facility near the Mall of America in Bloomington, Minn.
Andy Kruse | APM Reports

As COVID-19 surged during last year’s December holidays, a private testing company delivered some troubling news to officials at the Minnesota Department of Health: It had a backlog of nearly 28,000 tests. 

Nebraska-based GS Labs had been behind for weeks as cases of COVID’s omicron variant leaped. Among those delayed results, nearly 2,400 were positive. That included nearly 1,400 tests from people who may not have known they were carrying the virus, according to public records and state officials. 

The problem was no one-off. A nearly yearlong investigation by journalists from APM Reports found the company struggled to submit COVID test results even as the company allegedly pushed its regional sites to get customers to test more in order to maximize insurance payments and revenue. 

With a pandemic raging, the loose set of federal rules to police testing labs proved inadequate. Public health officials could do little more than express their exasperation as they struggled to contain the pandemic and the missteps. 

“Ugh, they are exceptionally bad at this,” Marijke Decuir, an epidemiologist with the Minnesota Department of Health, wrote after discovering another reporting problem by GS Labs in April 2021. Decuir added, in reference to GS Labs’ history with men’s health products, “I’d like to suggest they return to testosterone testing.” 

GS Labs executives declined interview requests but provided APM Reports detailed answers to a list of questions. The company said the reporting problems were rare and largely happened early in the pandemic. It said its investment in a new lab has resolved earlier testing problems. 

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"Aside from the rare examples that you have highlighted, GS Labs has consistently reported test results to patients and to public-health authorities on time and accurately,” the company said in a statement.  

But despite the company’s claims, The U.S. Centers for Medicare and Medicaid Services confirmed an ongoing investigation related to allegations of “fraud, waste or abuse” connected to GS Labs. Minnesota and three other states have signaled that they are also investigating the company. 

‘Please encourage all three tests’ 

APM Reports interviewed more than 65 consumers, former employees and public health officials, reviewed thousands of pages of public records and federal court filings. 

The team of reporters found that public health officials in Minnesota and other states have been grappling with problems caused by GS Labs for more than a year. Among the concerns: 

  • In April 2021, the company was delayed reporting 2,300 tests by up to a month, including 205 positive results, to Minnesota officials. The issues caused repeated headaches for contract tracers tasked with limiting the spread of the virus. 

  • In August, GS Labs notified Minnesota and other states that it accepted so many tests that backlogged samples had to be stored in freezers for more than a month before they were processed. 

  • In December, company officials told Minnesota that a lab employee at a GS Labs site in the St. Paul suburb of Maplewood caused 87 false positives.  

GS Labs started offering COVID-19 diagnostic tests in late 2020. The company quickly grew from a handful of sites to eventually testing in as many as 21 states.  


Expanding when COVID surges


In fall 2021, a Nebraska investigator determined that a GS Labs site in Omaha that processed PCR tests across the country had deficiencies that put the lab in “immediate jeopardy." The determination, which is the most severe under federal regulations, meant that the problems at the lab could have put some patients at risk of injury or death.  

Minnesota officials were never informed of the inspection until contacted by APM Reports. Officials with the Minnesota Department of Health provided written answers to basic questions but declined an interview request.  

GS Labs set up testing sites for patients who either had private insurance or were willing to pay cash.  

The company would aggressively market the service through online advertising and traditional billboards with the promise to deliver fast, reliable test results.  

Behind the scenes, however, the company was looking to maximize insurance payments by pushing customers to obtain all three types of COVID testing, according to a number of former employees at eight GS Labs locations in seven states.   

“Our numbers were low this week … please encourage all three tests,” Tara Houghton, the lead nurse at the GS Labs site in Blaine, Minn., wrote to her colleagues in an April 23 email obtained by APM Reports.    

Public health officials in Minnesota questioned whether the so-called triple testing — rapid, PCR and antibody tests — was necessary.  

“This is curious price gouging,” wrote Minnesota Department of Health epidemiologist Kathy Como-Sabetti in an email to colleagues in March 2021. “If you have symptoms an antigen test is sufficient … if you do not, a PCR test is recommended. There is no guidance that recommends antigen and PCR simultaneously.”

this is curious price gouging

The CDC recommended in June 2020 that antibody tests shouldn’t be used to determine an infection except when rapid or PCR tests aren’t available. GS Labs said it provided patients with information regarding each individual test to “enable patients to make an informed decision about what tests, if any, they wished to undergo.” It also said each test provides “distinct information that can complement the information provided by the other tests.” GS Labs stopped antibody testing in October 2021 after determining such tests were relatively ineffective on patients vaccinated against Covid-19, the company said. 

Insurance companies are also challenging the company’s triple testing in court, accusing GS Labs of “price-gouging” in court documents. GS Labs charged as much as $340 for a rapid test and $979 for a PCR test before lowering prices in January. 

Blue Cross and Blue Shield of Minnesota is one of three insurers suing GS Labs in federal court over those prices and the number of tests submitted to the insurance carrier.  

In legal filings, GS Labs denied the allegations and claimed the insurance companies are failing to comply with federal law. The company is countersuing in two of the cases and is also suing Minnesota-based Medica for refusing to pay for its tests. 

“Medica’s willful refusals to fully reimburse GS Labs constitutes 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 GS Labs has provided, without requiring prepayment, at great expense,” the company said in court documents.  

In a statement to APM Reports, the company acknowledged that its prices were higher than some other testing providers but said it faced significant startup costs as a new company and invested much of its money into operations. “Taking into account that financial reality, GS Labs has barely turned a profit,” the company said. 

“At a time when our communities desperately needed increased COVID testing capacity, GS Labs took action to deliver that testing, investing more than $150 million in a business whose prospective success and lifespan were extremely uncertain.”

- GS Labs written statement

‘How are we supposed to stop the spread?’ 

Beyond the slow reporting to public health agencies, consumers also ran into problems with GS Labs testing. Several complained that they were given wrong results, results so delayed that the tests were useless, or other patients’ results. Some never received test results at all.   

In November, Jackie Ormsbee and her daughter got tested at GS Labs after her child came into possible contact with someone that had the virus. The company quickly notified the Blaine, Minn., resident that the rapid test results were negative. Still, Ormsbee waited for GS Labs to process the two more reliable PCR tests she took before attending her family’s Thanksgiving dinner.   

GS Labs advertised a turnaround time of five days. Ormsbee ended up waiting 11 days for her results. Her daughter’s results never arrived. 

Since the delays ran past Thanksgiving, Ormsbee faced a difficult choice: Skip the holiday because their PCR results weren’t back or take the chance of seeing her family.  

Because her rapid tests were negative, she decided to attend Thanksgiving, only to learn after the holiday, when GS Labs finally returned her PCR result, that she’d been infected.    

Ormsbee said she’s lucky that none of her family contracted the virus. When interviewed in December, Ormsbee said her experience with GS Labs rocked her faith in the available testing options.   

“How are we supposed to stop the spread and also live our lives if it takes 11 days to get results?” she asked.  

A few consumers received tests that were mislabeled with someone else’s name or demographic information, according to public records from Minnesota and Washington and interviews with patients.  

“I think that was a red flag right there,” Minnesota resident Lucas Printz said of his experience with GS Labs. “I think it's ridiculous that I got somebody else's results. I just don't trust this whole process anymore.” 

GS Labs said it was unaware of any complaints of a person receiving someone else’s results.  

As for reports where a patient received results that differed from what was given to public health authorities, GS Labs said most of the mistakes were due to patient error.  

GS Labs currently operates in Minnesota and five other states.  

In its written responses to APM Reports, GS Labs said it filled a vital role as the pandemic raged. 

“At a time when our communities desperately needed increased COVID testing capacity, GS Labs took action to deliver that testing, investing more than $150 million in a business whose prospective success and lifespan were extremely uncertain,” the company said.  

“By filling a critical gap in COVID testing, GS Labs literally saved lives, and we are extremely proud of the service that we have provided to the communities we serve.” 

The company also maintains that it improved its public health reporting and terminated the Maplewood lab employee responsible for the false positives last December and characterized it as an isolated incident. 

‘History of poor performance’ 

Despite widespread complaints from consumers, former employees and public health officials, government officials have struggled to address concerns about GS Labs. 

Officials within the Minnesota Department of Health repeatedly discussed regulatory and legal options to get the company to improve its performance, according to a review of email records.  

In many instances, public health officials opted to send strongly worded letters to pressure the company to improve.  

Minnesota has jurisdiction over lab sites that operate within the state border. But GS Labs shipped PCR tests to a lab in Nebraska that isn’t overseen by Minnesota regulators.  

“I know GS Labs has a history of poor performance,” Minnesota Health Department epidemiologist supervisor Genny Grilli wrote in an email to her colleagues in January after the company notified the state in December about falling behind on test results. “I know we’ve looked into it in the past but I think it continues to hit a wall since a good amount of their testing is done out of state." 

Minnesota regulators forwarded complaints about PCR testing to their counterparts in Nebraska and to the U.S. Centers for Medicare and Medicaid Services.

In October, Nebraska investigators determined that the GS Labs’ Omaha laboratory was in “immediate jeopardy,” meaning the company’s noncompliance with certain lab requirements had placed the health and safety of recipients of its testing services at risk of serious injury.  

The list of deficiencies included failure to find quality control records, instrument printouts or patient reports. They found the lab was improperly storing specimens and chemical reagents by not monitoring freezer temperatures and said the lab director failed to ensure the overall operation and administration of the lab.   

The company responded to the findings by saying some of the allegations lacked merit and provided a correction plan for others, according to a company statement. 

GS Labs declined to provide APM Reports with a copy of its response to the inspection.   

The company also said it stopped accepting PCR tests "on or about” Sept. 22, the same day the inspector visited the lab, until the company opened a larger, more complex laboratory on Oct. 28.  

The company also said it prioritized transparency to public health officials even when that transparency “did not paint the company in the best light.”   

The Office of the Inspector General within the U.S. Department of Health and Human Services, the U.S. Center for Medicare and Medicaid Services, attorneys general in Minnesota, Kansas and Nebraska, the Washington Department of Health and the Kansas Insurance Department have all signaled they are investigating the company but declined further comment.  

The company declined to comment on the investigations except to say it is cooperating with authorities.  

Despite the complaints and concerns by public health officials and consumers, GS Labs continues to market tests to consumers.  

The company ran local ads in the Twin Cities during the Super Bowl in February. Company officials also encouraged the Minnesota Department of Health to put the company’s information on the state’s “Where to get tested” website. 

“Please let me know if you have any contacts/guidance that could help with this process,” GS Labs’ employee Alex Blankenburg wrote to the Minnesota Department of Health in February. “We want the communities that we serve to know we’re available to meet their testing needs .…”  

Holly Gilvary and Jasmine Snow contributed to this report.