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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934
November 21, 1996
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(Date of earliest event reported)
LABORATORY CORPORATION OF AMERICA HOLDINGS
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(Exact name of registrant as specified in its charter)
Delaware 1-11353 13-3757370
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(State or other (Commission (IRS Employer
jurisdiction or File Number) Identification
organization) Number)
358 South Main Street, Burlington, North Carolina 27215
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(Address of principal executive offices)
910-229-1127
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(Registrant's telephone number, including area code)
Item 5. Other Events
On November 21, 1996, the Company issued a press release announcing
that it has agreed to pay the U.S. government $187 million to
conclude previously disclosed federal investigations into the prior
billing practices of companies that merged to form the Company in
1995. The press release is attached as an exhibit hereto and the
text thereof is incorporated in its entirety herein by reference.
Item 7. Financial Statements, Pro Forma Financial
Information and Exhibits
(c) Exhibits
10 Press release of the Registrant dated November 21,
1996.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange
Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned hereunto duly authorized.
LABORATORY CORPORATION OF AMERICA HOLDINGS
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(Registrant)
By:/s/ BRADFORD T. SMITH
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Bradford T. Smith
Executive Vice President, General
Counsel and Secretary
Date: November 21, 1996
FOR IMMEDIATE RELEASE
Contacts: Pam Sherry (910)584-5171
Ext.6768
Walter Montgomery (212)484-6721
LABORATORY CORPORATION OF AMERICA
ANNOUNCES SETTLEMENT WITH U.S. GOVERNMENT
Company To `Close the Door on Past Billing Issues'
By Resolving Medicare and Related Government Billing Matters
Tied to 1993 Inquiries Involving Clinical Laboratory Industry
Settlement Is Industry's First Global Settlement
Related to 1993 Inquiries
Burlington, NC, November 21, 1996 --- Laboratory Corporation of
America Holdings (LabCorp) (NYSE:LH) today announced that it
has agreed to pay the U.S. government $187 million to conclude
previously disclosed federal investigations, initiated in 1993,
into the prior billing practices of companies that merged to form
LabCorp in 1995. The federal investigations have encompassed
billing practices in the clinical laboratory industry as a whole,
including predecessor companies of LabCorp, and have focused on
the medical necessity of certain laboratory tests billed to
Medicare and other third-party payors.
--more--
Settlement Is Industry's First Global Settlement
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LabCorp, which cooperated fully with federal authorities
throughout the course of these investigations, is the first
clinical laboratory company to reach a global settlement with the
government that completely resolves all outstanding issues
related to the investigations.
Commenting on the settlement, Dr. James B. Powell, President and
Chief Executive Officer, stated: "This action firmly closes the
door on past issues of law and regulation involving industry-wide
billing practices related to the investigations. It allows us to
refocus on building for the future of this Company. To help
speedily resolve the related third-party payor billing issues
that have preoccupied so many in this industry, we have decided
to put behind us government assertions concerning the past
billing practices of any component of our business. As a result
of this settlement, LabCorp will continue as a service provider
to Medicare and other government patients."
He added: "We have cooperated fully with the government over the
past three years and have achieved considerable progress in
putting a comprehensive, highly detailed compliance program into
effect. We will continue to work closely with regulators in fine-
tuning this compliance assurance system by swiftly integrating
the new features that are part of this settlement. These steps
affirm our long-standing commitment to maintain the highest
standards of compliance and quality in every aspect of our
operations. Going forward, we believe that this settlement
reflects a new emphasis on cooperation with the government that
will help forestall any reoccurrence of these billing issues."
--more--
The government's investigations covered billings for certain
tests performed as part of the chemistry profiles of LabCorp's
various predecessor companies from 1988 to 1994. These tests
were deemed by regulators to be medically unnecessary. The
investigations were part of a broad-based federal inquiry into
Medicare and related billings that have resulted in financial
settlements with a number of other clinical laboratories. The
inquiries have also prompted the imposition of more stringent
regulatory compliance requirements industry-wide.
Under the terms of the settlement, the Company agreed to pay $182
million to settle civil claims involving Medicare and related
government billings performed by LabCorp's predecessor companies:
National Health Laboratories Incorporated (NHL), Roche Biomedical
Laboratories, Inc. (RBL) and Allied Clinical Laboratories, Inc.
As part of the overall settlement, a San Diego laboratory that
was formerly part of Allied agreed to plead guilty to a charge of
filing a false claim with Medicare and Medicaid in 1991. The San
Diego laboratory was sold by Allied in 1992, two years before
Allied was acquired by NHL in 1994 (as a result of this sale,
Allied accepted a successor obligation to indemnify the San Diego
laboratory for outstanding liabilities --- an obligation LabCorp
later assumed). NHL's parent merged with RBL to form LabCorp in
1995. The violation involved a bill from that former Allied
laboratory to the government for an HDL-cholesterol test
requested by a physician for an AIDS patient. In connection with
this, Allied agreed to pay a $5 million fine.
--more--
In all, the Company will pay the government $5 million during the
fourth quarter ending December 31, 1996, and pay another $182
million during the quarter ending March 31, 1997. The Company
took a special pre-tax charge to earnings of $185 million, or
approximately $1.19 per share, during the quarter ended September
30, 1996, to increase reserves to cover costs relating to the
government settlement and anticipated private claims.
Company `Well Positioned To Fulfill Strategy'
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Summing up, Dr. Powell said: "Our expeditious settlement with
the government and our work on recapitalizing the Company will
contribute significantly to LabCorp's favorable outlook in
today's challenging health care environment. We are well
positioned to execute our strategy of growing a more profitable
revenue base by increasing our hospital affiliations, other
strategic alliances and esoteric laboratory capabilities. Our
synergy savings program remains on schedule, and there are other
cost-cutting efforts under way, as well. At the same time, we
remain focused on implementing more-effective ways to meet third-
party payors' more stringent medical necessity and diagnosis
coding requirements."
The Company notes that each of the above forward-looking
statements is subject to change based on various important
factors, including (without limitation) competitive actions in
the marketplace and adverse actions of governmental and other
third-party payors. Further information on potential factors
that could affect the Company's financial results is included in
the Company's Form 10-K for the year ended December 31, 1995.
--more--
Laboratory Corporation of America Holdings (LabCorp) is a
national clinical laboratory organization with estimated
annualized revenues of $1.6 billion. The Company operates
primary testing facilities nationally, offering more than 1,700
different clinical assays, from routine blood analysis to more
sophisticated technologies. LabCorp performs diagnostic tests
for physicians, managed care organizations, hospitals, clinics,
long-term care facilities, industrial companies and other
clinical laboratories.
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