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LabElite, COVID Testing Lab Raided By FBI, Failed To Report Thousands Of Test Results, Feds Say

LabElite, owned by a former Evanston bar owner, shut down a "sham" facility that racked up complaints in Iowa, its spokeswoman said. But its Norwood Park headquarters has also been the subject of many complaints.

Federal agents and police at LabElite at 5824 N. Northwest Highway on Feb. 23, 2022.
Mina Bloom/Block Club Chicago
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NORWOOD PARK — A Chicago COVID-19 testing company that’s under investigation has been the subject of “numerous” complaints and has had a facility cited at the highest level by a federal agency.

LabElite’s Norwood Park lab and office was raided last week by the FBI and other law enforcement agencies. The federal Centers for Medicare and Medicaid Services, which oversees labs, is investigating complaints about that facility, a spokeswoman said. It also cited a LabElite site in Iowa at the highest level for various issues, including for failing to report thousands of test results, newly released documents show.

The Centers for Medicare and Medicaid Services “continues our investigations and will take compliance and enforcement actions as appropriate,” the spokeswoman said.

LabElite has received more than $77 million from the federal government.

LabElite spokeswoman Lissa Druss said the company won’t comment on open investigations, but it is cooperating with the Centers for Medicare and Medicaid Services and the U.S. Attorney’s Office. It shut down the facility in Iowa, Druss said.

“LabElite is one of the region’s premier laboratories that goes above and beyond the guidelines of regulating authorities,” Druss said.

The Chicago-based company has faced various issues.

Inspectors found the LabElite-partnered site in Iowa did not inform the government of thousands of test results, improperly handled rapid tests, did not have documented training for some staff members and did not have a qualified director. The Illinois Attorney General’s Office and Centers for Medicare and Medicaid Services have also reported complaints about the company’s Norwood Park headquarters.

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Multiple LabElite customers told Block Club they experienced problems: They said results were badly delayed or never delivered, they got results that didn’t make sense, the company didn’t respond to their concerns and some were told to not enter their insurance information when testing, among other things.

Druss previously said the company has responded to every customer complaint, and she denied the company didn’t collect insurance information properly, saying it would be “wrong, untruthful and uncalled for.”

LabElite is one of at least four Chicago-area testing companies facing various investigations: The Center for COVID Control’s Rolling Meadows headquarters were raided by the FBI, and the company and its lab have been sued by two states’ attorney generals after Block Club reports about numerous issues with the companies. O’Hare Clinical Lab and Northshore Clinical Lab have been cited at the highest level by federal authorities.

Together, these four Chicago-area testing companies have processed millions of tests for hundreds of sites across the United States. They have received more than $582 million from the federal government.

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Complaints In Chicago And Iowa

LabElite was registered with the state of Illinois in October 2020 under Nikola Nozinic. Nozinic ran a now-closed bar called The Whiskey Thief in suburban Evanston, among other restaurant ventures, and he’s run construction and plumbing companies.

The lab partners with testing sites that collect rapid and PCR samples, with the PCR samples then processed by LabElite. It has processed tens of thousands of tests from various states, including Illinois, Pennsylvania and Florida.

The lab’s partners “operate under LabElite’s stringent Memorandum of Understanding and Business Agreement,” Druss said.

The Centers for Medicare and Medicaid Services spokeswoman said her agency has received “numerous” complaints about LabElite’s Norwood Park facility, 5824 N. Northwest Highway. The spokeswoman said she could not share details yet on the agency’s findings or comment on what the complaints entail.

Reports from the agency also highlight serious issues at a site LabElite partnered on in Dubuque, Iowa. That facility was cited for immediate jeopardy — the highest level of offense — by inspectors.

LabElite opened that site Dec. 29 at Kennedy Mall, according to posts and flyers from the mall.

Inspectors visited the facility Jan. 26 and spoke to a staff member, who said the site had performed 4,882 rapid tests since Dec. 25 and had not reported those results to a state agency, according to the report.

Inspectors also found the site’s workers did not monitor what temperature rapid test kits were kept at, nor did they use timers to ensure they were checking test results at the right time for an accurate result.

The rapid tests used at the site were supposed to be used by “trained clinical laboratory personnel” or medical personnel, but the site did not have documentation showing workers had been trained, according to the report.

The site also did not have a qualified director, as the “director failed to ensure that testing systems developed and used for each of the tests … provide quality laboratory services,” according to the report.

“Once LabElite realized the collection agent was running a sham facility in Iowa, LabElite immediately shut down the location and has been cooperating fully with the Iowa Department of Public Health,” Druss said.

LabElite submitted a response to the report, and that is under review, the Centers for Medicare and Medicaid Services spokeswoman said.

Complaints have come in elsewhere, as well. The Illinois Attorney General’s Office has received 16 complaints about LabElite, a spokeswoman said.

Credit: Mina Bloom/Block Club Chicago
An FBI raid of LabElite at 5824 N. Northwest Hwy on Feb. 23, 2022.

The Better Business Bureau, a nonprofit that monitors businesses, has also received two complaints about LabElite and has given the company a B- rating, a spokesperson said.

Pop-ups in Philadelphia that were collecting test samples to send to LabElite were falsely claiming to be affiliated with the Federal Emergency Management Agency and were allegedly asking for customers’ social security numbers, according to the Philadelphia Inquirer.

The testing sites were shut down, and Nozinic apologized for the confusion and said LabElite had ended its partnership with the sites, according to the Inquirer.

“These guys were kind of running a wild s—show, so they were ordered to shut them down,” Nozinic told the Inquirer.

A box of samples that was supposed to be delivered to LabElite’s Chicago lab was also mistakenly delivered by FedEx to a family in Hawaii, according to the Boston Globe.

Officials would not say what spurred last week’s FBI raid of LabElite’s Norwood Park headquarters, but spokespeople for the FBI and U.S. Attorney’s Office said there was “court-authorized law enforcement activity” at the location. The investigation is ongoing, so officials cannot comment on it, according to the U.S. Attorney’s Office.

A spokeswoman for the Illinois Attorney General’s Office said her agency is “committed to protecting residents from those who attempt to profit off of the deadly COVID-19 pandemic” and is contact with Illinoisans who file complaints about COVID-19 testing locations.

“As a result, today investigators from the Attorney General’s Office and other law enforcement partners are taking action,” spokeswoman Annie Thompson said. “We will not comment on active investigations as we work to hold accountable individuals who engage in unlawful conduct.”

Customer Concerns

Customers have reported various issues with LabElite, especially during the Omicron surge in late December and early January.

Druss said many of those issues were due to problems shipping during the surge and the increased demand for testing. LabElite also saw some employees get sick with COVID-19, Druss said.

“All of that wrapped into one, it was like a perfect storm,” Druss said.

Renee Fonseca, of Hyde Park, said she went to a testing facility partnered with LabElite on Dec. 16 because she was feeling under the weather and had a flight coming up. Workers there told her she’d get rapid results in 24 hours and PCR test results in six to seven days, she said. They used one swab to get Fonseca’s sample for the separate rapid and PCR tests, she said.

No test results arrived within 24 hours, so Fonseca called the testing facility — but its calls went straight to a full voicemail, she said. She called LabElite’s main office, where a worker told Fonseca they couldn’t give her results and she should keep trying to call the facility she’d tested at, she said. She called multiple times after that but didn’t get her rapid test results until Dec. 21 — about a week after she’d tested, she said.

“Which is just really bad for any sort of contact tracing,” Fonseca said. She “basically gave up ever seeing my PCR results.”

The PCR results did come in, but not until Jan. 3, Fonseca said.

“… Their timeline is so shifted, and that’s a major issue for any sort of preventative testing prior to going to events, contact tracing,” Fonseca said. “Most folks can’t just stay home for four weeks, waiting for a PCR when they need to go to work or do things. … It’s not a system that would work given reality. There’s no reason for me to waste my time and energy with them again.”

Debby Donovan, of suburban Berwyn, said she went to a city-organized mass testing event run by LabElite where she struggled to fill out a registration form on her phone. A worker there gave Donovan a paper form to fill out and told her to not put down her insurance, though she wrote her insurance information anyway, she said. The worker told Donovan it’d be quicker if she didn’t provide her insurance, she said.

A worker doing a PCR test for Donvan put a swab up her nose, immediately removed it and was done, Donovan said. The worker did not swirl the swab or keep it Donovan’s nose for several seconds, she said.

A rapid test at the site showed Donovan was positive, and she took an at-home test that also came back positive, she said. But LabElite later sent Donovan a PCR test result from the same event that said she was negative, she said.

Credit: Mina Bloom/Block Club Chicago
An FBI raid of LabElite at 5824 N. Northwest Highway on Feb. 23, 2022.

Heather O’Leary, of the Gold Coast, said she tested at a LabElite-partnered site Dec. 22 where a worker told her to not enter insurance information.

“Oh, don’t worry about it,” the worker said, according to O’Leary. “Just leave it blank.”

The workers wore masks but not gloves, and there was no social distancing in the “very small” space, O’Leary said. O’Leary was given swabs with “minimal directions,” she said. That night, she got a rapid test result that said she was negative.

O’Leary’s PCR test result still hasn’t arrived, she said last week.

Druss denied LabElite hasn’t collected insurance information properly, saying it would be “wrong, untruthful and uncalled for.” The lab is paid more for testing when it bills insurance than when it seeks reimbursement through the federal government, Druss said.

“Now, if there was a rogue employee somewhere along the way, I can’t speak for that,” Druss said.

“The accuracy of my second [LabElite] result is terrible,” Soter said. “I mean, it was wrong; and I know it was wrong. He didn’t swab it properly.

“… That negative test, which they did send me, I could have gone out and infected other people because I felt great. But I had the virus in my nose. And their sloppiness could have resulted in a gazillion people, or a lot of people, coming down with this. … How many other people did they send out with false negative tests?”

READ MORE

• FBI Raids Another Chicago COVID Testing Company — Which Has Gotten $77 Million From The Feds

• Troubled Center For COVID Control Must Prove It Followed State Rules, California Official Says

• Could New Laws Fix The Problems With COVID-19 Testing Pop-Ups? Legislator Proposes Bills To Rein In Sites, Labs

• Center For COVID Control’s ‘Sham’ Testing Sites Put People At Risk With False Results, Tests In Garbage Bags, New Suit Alleges

• Center For COVID Control Shutting Down Amid Federal, State Investigations, Employees Told

• Yet Another COVID-19 Testing Company That Got Millions From The Feds Being Investigated After Patients Say Their Results Were Flawed

• Another Major COVID Testing Company — Which Got $186 Million From The Feds — Is Under Investigation As Complaints Pile Up

• Center For COVID Control’s Headquarters Raided By FBI

• Center For COVID Control Closed For ‘Foreseeable Future’ In Illinois Amid Federal, State Investigations

• Center For COVID Control Got $124 Million From Feds While Telling Workers To Lie About Results, Throw Tests In The Trash, Ex-Employees Say

• Center For COVID Control Faked Test Results, Minnesota Attorney General Says In New Lawsuit

• COVID Tests Seemed To Vanish Just When Chicagoans Needed Them Most — And Despite Officials Predicting Surges For Months

• COVID-19 Testing Chain Opened Pop-Ups Across The US. Now, It’s Temporarily Closing Amid Federal Investigation And Mounting Complaints

• Be Cautious Around COVID-19 Testing Pop-Ups, Illinois Attorney General Warns

• Pritzker Vows To Shut Down ‘Fly-By-Night’ Pop-Up COVID Testing Sites, Calling Them An ‘Enormous Problem’

• COVID Test Shortage Forces Chicagoans To ‘Hell-Hole’ Pop-Up Sites With Unmasked Workers, Missing Results

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