What remains of Reditus Labs will pay out $5.5 million to settle a lawsuit sparked by a whistleblower who was one of the first to spot fraud inside the now-defunct Central Illinois COVID testing giant.
The settlement will send $2.3 million back to the state and federal government that were among the victims of the fraud, plus $87,500 for Peoria County, according to a copy of the settlement provided to WGLT. The whistleblower, Dr. Lorine LaGatta, will get $1.1 million for blowing the whistle, plus $1.5 million for her individual claims of wrongful termination and another $500,000 to cover her legal fees.
LaGatta’s attorney, David Fish, announced Tuesday that the settlement had been reached. Court filings confirm the settlement, although a few loose ends remain that leave the case pending.
LaGatta first approached Fish's firm while she was still medical director at Tri-County Pathology, a company closely linked to Pekin-based Reditus, Fish said. She wasn’t looking to sue, he said. She just wanted to protect herself and her co-workers after observing suspicious activity at work.
Ultimately, Fish said LaGatta’s 2022 complaint helped spark investigations by state and federal authorities that put Reditus CEO Aaron Rossi behind bars. Reditus itself went out of business.
“Dr. LaGatta is a real hero,” said Fish. “She came forward with no monetary expectation. She just wanted to see that her co-workers and herself were protected, and to make sure the right thing was being done. For her to have the courage to stand up, she was very brave. She ended up being fired, we believe, because she spoke up and did the right thing.”
Reditus made hundreds of millions of dollars from state contracts for COVID-19 testing and brought hundreds of jobs to Pekin. Reditus had testing contracts with the Illinois Department of Public Health and the Illinois Department of Corrections. It ran the COVID testing site at Bloomington’s Interstate Center for much of the pandemic.
During that time, prosecutors and others allege Rossi was actually defrauding taxpayers and health insurance companies, in part to fund his own lavish lifestyle. Rossi was accused of using bogus billing codes to get reimbursed for work his company never did, and also double-billing the state of Illinois for work already reimbursed by private insurers.
LaGatta witnessed what she perceived as billing and kickback schemes. She alleged that Reditus and Rossi exploited the COVID-19 pandemic to make money from the government.
As criminal investigations began, Fish said LaGatta cooperated with law enforcement and proved “instrumental” as they built cases against Rossi.
“As an insider, she really had a lot of knowledge about what was happening at Reditus,” Fish said. “She was able to explain really complex medical concepts to [investigators] in ways that made sense.”
LaGatta said “taxpayers should never have to foot the bill for improper billing.” She paid a price too: Fish said she was unable to find work in Central Illinois due to a noncompete agreement, forcing her to move out of state.
“This outcome isn’t just about one lab or one person – it’s about protecting our healthcare system and our communities,” LaGatta said in a statement. “My hope is that this settlement leads to better safeguards and a reminder that no one is above the law, even during a crisis.”
A second whistleblower lawsuit against Reditus was dismissed last year. Fish said “first to file” rules surrounding whistleblower cases led to the dismissal, meaning LaGatta's case could proceed because it was filed first.
