Quest Diagnostics to pay $11.35 million to settle whistleblower case

Company billed Medicare for unnecessary blood tests

March 3, 2004 - Quest Diagnostics Inc. has agreed to pay the federal government $11.35 million to settle a whistleblower lawsuit that alleged the company billed Medicare for certain blood tests that doctors hadn't specifically ordered and weren't medically necessary.

Quest and its subsidiary, Unilab Corp., automatically included apolipoprotein tests (APOs) when doctors ordered a panel of blood tests for cardiac risk evaluation from the clinical laboratory companies, according to the lawsuit and federal government. APOs, which are very expensive tests, measure the presence and levels of lipoproteins in the blood.

Doctors were unaware that Quest billed Medicare separately for the APOs. Quest hid the billing fraud from doctors by including the cost of the APOs in the charge for a coronary risk panel when the company billed physicians directly. When Quest submitted bills to Medicare, it charged Medicare for the panel and added a separate charge for one or more apolipoprotein tests.

"The size of this settlement is a credit to the diligent work of the U.S. Attorney's office in Newark, specifically Michael Chagares and Stuart Minkowitz," said Mary Louise Cohen, a Washington, D.C., attorney with Phillips & Cohen LLP, which represents the whistleblower, Kevin Spear. "They pursued this case until the government received a fair settlement for the fraud."

Spear, a salesman for Unilab before it was acquired by Quest, filed his "qui tam" (whistleblower) lawsuit in 1997 in federal district court in Newark. He alleged that Unilab, Quest and its corporate predecessors - MetPath Inc. and Damon Corp. - engaged in the billing fraud from 1990 to 1997. Quest, one of the nation's largest clinical laboratory companies, is based in Teterboro, NJ.

Under the False Claims Act, whistleblowers are entitled to 15 percent to 25 percent of the money the government recovers as a result of their qui tam lawsuits. Spear will receive 21 percent.

For more information, please see the following news stories:

  • "Quest OKs $11.35M settlement in suit over patients' lab tests," Amy Klein and Lewis Krauskopf, The (Bergen County) Record, 3/4/04.
  • "Quest Diagnostics Inc.: Lawsuit over medicare fraud to be settled for $11.4 million," Wall Street Journal, 3/4/04.
  • "California medical lab firm settles fraud suit," Bloomberg News, Los Angeles Times, 3/04/04.