The investigation began when the state was notified by the owner of a Bay Area lab that wouldn't cut its prices to match the illegal discounts.
"The physicians said the groups said 'We'd love to work with you if you can match these prices,' and they couldn't match the prices in many cases because the prices being offered by these defendants were far below cost," said Justin Berger, a whistleblower's attorney.
Prosecutors say in exchange for the steep discounts, the defendants expected their customers to refer all of their other patients to their lab.
Under state law, that amounts to an illegal kickback.
Most of the labs are in Southern California.