Business

Labcorp Agreed to Pay $14.5 Million Over Medicare Tests That Weren’t Medically Necessary

By Erica Coleman · July 16, 2026

The tests were real. The medical need, according to federal prosecutors, was not.

Labcorp, one of the largest clinical laboratory networks in the country, has agreed to pay $14.5 million to resolve allegations that it systematically billed Medicare for overlapping urine drug screening tests — charging the federal program for combinations of tests that weren’t medically necessary and that, in some cases, weren’t ordered by the treating physician at all.

The settlement, announced by the Department of Justice, resolves False Claims Act allegations covering Labcorp’s billing practices from 2016 through 2023. The core allegation: Labcorp routinely billed Medicare for both a broad initial drug screen and a more expensive confirmation test on the same patient sample, regardless of whether the confirmation test was clinically indicated or physician-ordered. The government alleged that Labcorp’s own protocols drove this bundled billing, rather than individual clinical decisions by treating doctors.

Medicare’s reimbursement rules require that tests be medically necessary and ordered by a physician. A confirmation test is typically only appropriate when an initial screen produces a result that needs to be verified — not as a routine add-on to every specimen. By bundling the tests regardless of clinical need, the government alleged, Labcorp collected payments it wasn’t entitled to.

Labcorp has not admitted wrongdoing as part of the settlement. The company said in a statement that it cooperated with the investigation and that the settlement allows it to move forward without protracted litigation. The $14.5 million will be paid to the federal government; no portion is designated for direct consumer refunds.

The case matters beyond the dollar figure. Urine drug testing has been one of the most aggressively scrutinized areas of Medicare billing for years. The federal government has pursued dozens of cases against laboratories, hospitals, and physician practices over the past decade alleging that drug testing was billed at volumes and in combinations that no clinical rationale could justify. The settlements have ranged from the low millions to, in some larger cases, the hundreds of millions.

For Medicare patients, the practical consequence is indirect but real: overbilling by laboratory companies inflates the cost of the Medicare program, contributes to program spending that affects future benefit structures and reimbursement rates, and in some cases results in patients being billed for cost-sharing on tests they didn’t need.

Labcorp processes roughly 150 million patient encounters per year and operates more than 2,000 patient service centers across the United States. The settlement covers the company’s laboratory billing operations, not its clinical services or testing accuracy.