Minnesota judge tosses COVID lab's lawsuit over costs of testing

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

A federal judge in Minnesota has dismissed a lawsuit filed by a COVID-19 testing company that wanted the court to compel a health insurer to pay whatever the testing company wanted to charge.  

Last year, Nebraska-based GS Labs sued Minnesota-based health insurer Medica in U.S. District Court. The suit arose from a dispute over insurance payments for COVID tests. GS Labs alleged that federal law requires the health insurance company to pay the full price of tests as listed on the GS Labs website. 

Judge Susan Richard Nelson disagreed. In dismissing the lawsuit, she ruled that federal law does not give the testing company the right to seek payments from insurers through a lawsuit.  

“While diagnostic testing providers may have incidentally benefited from the goal of providing COVID-19 testing access to patients, the CARES Act was not intended to especially benefit testing providers,” Nelson wrote in an order released this week.  

The ruling is a blow to GS Labs, which is facing lawsuits from Blue Cross Blue Shield insurers in Minnesota, Washington and Missouri. The insurers allege GS Labs engaged in “price gouging” by charging nearly $1,000 for some tests. The insurers also allege that GS Labs pushed customers into unnecessary tests.  

Medica released a statement saying the company appreciated the judge’s ruling.  

“Medica takes seriously its obligation to protect the health care dollars entrusted to us by our customers and members,” Medica Public Relations Manager Greg Bury said in the statement. “Our goal with providers is to always pay rates that reflect fair prices and that promote an affordable, predictable experience for our members, in compliance with the law.” 

A spokesperson for GS Labs said the company is reviewing its legal options. 

A nearly yearlong investigation published this summer by journalists from APM Reports found the company struggled to submit COVID test results in Minnesota even as the company allegedly pushed its regional sites to get customers to test more in order to maximize insurance payments and revenue.