GS Labs Sues Aetna Over $53 Million in Allegedly Unpaid COVID-19 Testing Claims

GS Labs sues Aetna for $53M, alleging underpaid COVID test claims in a case highlighting insurer-provider tensions over pandemic-era reimbursement laws.

ByZach Barreto

Published on

Covid-19 Testing Site

Nebraska-based GS Labs LLC has filed a lawsuit in the U.S. District Court for the Northern District of California, alleging that Aetna Inc. failed to reimburse more than $53 million in COVID-19 testing costs. The complaint asserts that Aetna violated both federal and state laws through “systematic underpayment and nonpayment” of pandemic-related diagnostic testing services.

GS Labs contends that Aetna was obligated under federal pandemic relief statutes to pay for COVID-19 diagnostic testing at the provider’s listed cash price when no preexisting negotiated rate existed. The complaint references both the Families First Coronavirus Response Act (FFCRA) and the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which collectively required health insurers to reimburse out-of-network testing providers for services rendered during the public health emergency.

According to court filings, GS Labs invested heavily in its testing infrastructure early in 2020, opening more than 50 testing sites nationwide, each capable of administering up to 1,000 tests per day. The company stated that it relied on Aetna’s representations that testing would be reimbursed consistent with federal law.

Alleged Underpayments and Unpaid Balances

The complaint accuses Aetna of engaging in widespread underpayment, clawbacks, and unilateral repricing of claims. GS Labs asserts that Aetna’s self-imposed discounts account for approximately $36.9 million of the total unpaid balance, while another $16.2 million represents claims allegedly not paid at all.

“In thousands of other cases, for claims totaling more than $16.2 million, Aetna has simply not paid,” GS Labs said in its filing. The company claims that Aetna “accomplished this fraudulent undertaking through various schemes and entities,” including administrative services–only (ASO) plans operated in conjunction with self-insured employers.

Among the legal claims brought, GS Labs alleges violations of the Racketeer Influenced and Corrupt Organizations Act (RICO), fraud, and violations of California’s laws against deceptive and unlawful business conduct. The company seeks compensatory, treble, and exemplary damages.

Alleged Fraud and Public Misrepresentation

GS Labs contends that Aetna misled the public and healthcare providers through a “misinformation campaign,” portraying itself as compliant with federal testing reimbursement mandates. The complaint asserts that Aetna used public statements and marketing materials to generate goodwill while simultaneously reducing or denying payments to testing providers.

According to GS Labs, Aetna also operated a “repricing reduction scheme” in collaboration with external repricing companies. The insurer allegedly leveraged these relationships to pay itself “extra savings fees” while minimizing reimbursements to providers. A related “overpayment recovery scheme” allegedly allowed Aetna to recoup funds previously disbursed to GS Labs under the pretense of correcting claim errors.

The complaint further alleges that Aetna “went to lengths to circumvent its obligations under federal law,” coordinating with co-conspirators through its ASO plans to enrich itself at the expense of COVID-19 testing providers.

Financial and Operational Impact

GS Labs states that it has suffered significant financial and operational losses as a result of Aetna’s alleged conduct. In addition to unpaid claims, the company asserts that it incurred “millions of dollars in time, labor, and other administrative expenses” associated with claim submission, appeals, and compliance activities.

The complaint emphasizes that GS Labs’ business model rapidly adapted to meet public health needs during the pandemic, investing substantial capital in testing capacity and digital scheduling systems that allowed patients to book appointments within 15 minutes and receive results within 20 minutes. The company argues that Aetna’s reimbursement failures undermined those efforts and created lasting financial harm.

Aetna’s Response

Aetna has publicly rejected the allegations, maintaining that the claims “have no merit.” A company spokesperson stated that Aetna “will vigorously defend itself against these claims,” signaling the insurer’s intent to contest the lawsuit.

No defense counsel has been listed in court records as of early October 2025. GS Labs is represented by Michael Merriman, Luke I. Landers, Alec Schultz, and Hadyn Pettersen of Hilgers Graben PLLC.

Broader Legal Context

This dispute highlights the broader tension between insurers and testing providers over reimbursement obligations established under federal pandemic legislation. Numerous cases have raised similar questions regarding how insurers interpreted the CARES Act’s “cash price” requirement for out-of-network COVID-19 testing.

Legal analysts note that the outcome of this case may influence how courts interpret insurers’ payment responsibilities for emergency health services during declared public health crises. If GS Labs succeeds on its RICO or fraud claims, the company could recover treble damages, substantially increasing Aetna’s potential financial exposure.

The case underscores the continued legal fallout from COVID-19 reimbursement policies and the complex interplay between federal emergency mandates and private insurer practices.

Case Details

Case Name: GS Labs LLC v. Aetna Inc., et al.
Court Name: U.S. District Court for the Northern District of California
Case Number: 4:25-cv-08525
Plaintiff Attorney(s): Hilgers Graben PLLC

About the author

Zach Barreto

Zach Barreto

Zach Barreto is a distinguished professional in the legal industry, currently serving as the Senior Vice President of Research at the Expert Institute. With a deep understanding of a broad range of legal practice areas, Zach's expertise encompasses personal injury, medical malpractice, mass torts, defective products, and many other sectors. His skills are particularly evident in handling complex litigation matters, including high-profile cases like the Opioids litigation, NFL Concussion Litigation, California Wildfires, 3M earplugs, Elmiron, Transvaginal Mesh, NFL Concussion Litigation, Roundup, Camp Lejeune, Hernia Mesh, IVC filters, Paraquat, Paragard, Talcum Powder, Zantac, and many others.

Under his leadership, the Expert Institute’s research team has expanded impressively from a single member to a robust team of 100 professionals over the last decade. This growth reflects his ability to navigate the intricate and demanding landscape of legal research and expert recruitment effectively. Zach has been instrumental in working on nationally significant litigation matters, including cases involving pharmaceuticals, medical devices, toxic chemical exposure, and wrongful death, among others.

At the Expert Institute, Zach is responsible for managing all aspects of the research department and developing strategic institutional relationships. He plays a key role in equipping attorneys for success through expert consulting, case management, strategic research, and expert due diligence provided by the Institute’s cloud-based legal services platform, Expert iQ.

Educationally, Zach holds a Bachelor's degree in Political Science and European History from Vanderbilt University.

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