People v. Duz-Mor Diagnostic Laboratory, Inc.

This case concerns the marketing and billing practices and procedures of clinical laboratories which perform services for Medi-Cal beneficiaries. The Attorney General, acting on behalf of the People of the State of California, appellant here, alleged that one such laboratory, Duz-Mor Diagnostic Laboratory, Inc., violated the Unfair Competition Act 1 (the Act) by charging discounted fees to certain patients, by paying commissions to an independent marketing contractor, and by “unbundling” Medi-Cal billing, so that certain tests which should have been billed together were *658 billed separately. Appellant also alleged that the use of unbundled billing violated the False Claims Act, Government Code section 12651. The trial court found that none of the practices were unfair and that none violated any law, and thus that appellant had not proved a violation of the Act or the False Claims Act. We agree with many of the trial court’s conclusions, but do find that with regard to one of the factual allegations, concerning commissions paid to an independent contractor for marketing services, appellant proved a violation of law, and thus of the Act. We therefore reverse the…