Businessman exposed problems with Quest subsidiary’s blood test kits; led to $302 million settlement

NEW YORK CITY, NY – The impetus for the massive federal investigation that led to today’s $302 million settlement by Quest Diagnostics Inc. was a “qui tam” (whistleblower) lawsuit brought by Phillips & Cohen on behalf of a California businessman and biochemist.

The qui tam lawsuit provided detailed allegations about problems with medical test kits that a Quest subsidiary, Nichols Institute Diagnostics Inc. (NID), manufactured and sold to medical testing labs across the country from 2000 to 2006 despite complaints of inaccurate test results, putting the health of hundreds of thousands of dialysis patients at risk.

As a result of the faulty tests, the lawsuit said, some dialysis patients underwent unnecessary surgery to remove their parathyroid and were administered unnecessary treatment that can cause a painful, deadly disease. Today’s settlement covers claims that the bad tests led to overtreatment and unnecessary surgeries.

The “qui tam” (whistleblower) lawsuit was kept under seal and unknown to the public until today when a federal judge approved the settlement and the Justice Department announced it.

The settlement is the largest one ever paid by a medical lab company for a faulty product. Previous large Medicare fraud settlements paid by lab companies involved billing practices. The settlement includes $253 million to settle the qui tam lawsuit, $9 million to settle other civil lab claims and $40 million to settle a felony criminal charge.

Dialysis patients suffer from End Stage Renal Disease (ESRD). ESRD is the only disease Medicare covers regardless of age or disability.

As a result of the government’s investigation into the NID test kits, Quest shut down its 30-year-old profitable subsidiary in 2006. At the time, NID was the leading manufacturer of kits used to conduct certain essential blood tests for dialysis patients.

NID’s medical test kits, known as the Advantage intact Parathyroid Hormone Assays, were employed to determine the concentration of a parathyroid hormone (PTH) and were used by major medical labs across the country. Doctors determined the treatment of dialysis patients based on the test results, so accurate results were essential.

“Dialysis patients and their doctors relied on the PTH tests kits to determine treatment for these vulnerable patients,” said Erika A. Kelton, a Washington, DC, attorney with Phillips & Cohen LLP, which represents the whistleblower. “The health consequences of inaccurate measurements of PTH in a dialysis patient can be serious, irreversible and cause tremendous pain.”

High levels of PTH indicate a dialysis patient is suffering from hyperparathyroidism and high bone turnover disease, which prevents the body’s essential replacement of old bone with healthy, new bone — both common complications from kidney disease. Injections of vitamin D drugs (which are dangerous if overdosed) are used to treat those conditions. Doses are based on PTH levels.

If PTH levels are thought to be higher than they actually are, doctors will mistakenly prescribe too much of these drugs, which can lead to a painful calcification of blood vessels and other soft tissue, a condition arising from adynamic low bone turnover disease that can be deadly. When patients thought to have high PTH levels do not respond to vitamin D drugs, they often will undergo surgery to remove their parathyroid glands.

Thomas Cantor, founder, president and owner of Scantibodies Laboratory Inc., filed the qui tam lawsuit against Quest and NID in 2004 in federal district court in Brooklyn, New York. His qui tam lawsuit alleged Quest and NID were defrauding the government by causing healthcare providers to bill Medicare and other federal healthcare programs for faulty medical tests as well as unnecessary and harmful vitamin D drugs to treat inaccurately diagnosed diseases and unnecessary surgeries.

In late 2004, the Justice Department served NID and Quest with subpoenas regarding PTH testing and dosing of vitamin D drugs. In 2005, NID recalled all of its test kits. Quest discontinued all operations at NID one year later.

Cantor had tried since 2000 to alert the medical community to problems with NID’s Advantage intact PTH Assays. Based on doctor complaints, comparative testing on dialysis patient blood specimens from across the US, Europe and Japan and his own research conducted at his own cost, Cantor determined that PTH results from NID’s Advantage intact PTH Assays, an automated test, were in some patients two to three times higher than results from NID’s own older, manual test (Nichols Allegro intact PTH Assay), which was considered the industry standard, and Scantibodies’ tests.

“This was a very, very serious problem,” Cantor said. Cantor made a special request for Medicare data on parathyroidectomies (surgery to remove parathyroids) for ESRD patients and was alarmed to see there had been a dramatic increase in the number of operations after labs began using the faulty test.

Through thousands of emails sent to healthcare providers and regulators in the U.S. and overseas, private and public presentations and scientific publications (including one published in Seminars in Dialysis in September 2005), Cantor tried to convince individual doctors, dialysis organizations, the Food and Drug Administration and health officials across the country and in other countries that NID’s automated PTH test was inaccurate. But he got nowhere.

Frustrated, Cantor searched the internet for ideas on what else he could do to stop patient damage by use of the inaccurate tests. It was then he learned about the False Claims Act. The law allows private individuals to sue companies that are defrauding the government and recover damages on behalf of the government.

For Cantor, the most important part of the False Claims Act was that it requires the government to investigate allegations made in a “qui tam” lawsuit. After he presented to government investigators his evidence about NID’s inaccurate PTH tests and his concerns about danger to dialysis patients, Cantor recalled, an FBI agent told him, “I promise you that we will make it stop.”

“I felt very frustrated when I tried to stop the use of faulty tests on my own,” Cantor said. “Thanks to the False Claims Act and the government’s work on my case, this is a good day for dialysis patients and for clinicians who rely on accurate test results.”

Attorney Kelton offered high praise for the work done by the government team on the case, particularly Assistant U.S. Attorney Paul Kaufman.

“Paul Kaufman and the team of government lawyers and investigators did a superb job pursuing this case in an efficient and effective manner,” Kelton said. “When we filed our case, they recognized immediately the threat to dialysis patients and moved swiftly to protect them.”

Whistleblowers are entitled to 15 percent to 25 percent of the amount the government recovers as a result of their qui tam lawsuits. The government will award Cantor 18 percent of the $253-million qui tam settlement as a reward for the information he provided and the work he and his attorneys did on the case. Cantor will use the reward to fund research into antibody therapies to treat drug-resistant infections, HIV and hepatitis.

“I pursued this case because I was very concerned about patient care, so it’s fitting that the money from this case be used to benefit patients,” Cantor said.


Phillips & Cohen is the most successful law firm representing whistleblowers, with recoveries from our cases totaling billions. We have been recognized for our work by numerous national awards. Our attorneys and cases have been in The New York TimesThe Wall Street Journal, the Financial Times and other news media. Three of our cases were featured in the CBS series, “Whistleblower.” Phillips & Cohen’s roster includes former federal prosecutors, the first head of the SEC Office of the Whistleblower, a former deputy administrator of the Centers for Medicare and Medicaid Services, the author of a leading treatise on the False Claims Act and attorneys with decades of experience representing whistleblowers.

Let us help you.
Get a free, confidential case review