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Quest Diagnostics Agrees to Pay $302 million in False Claims Case

Kristen Kohrt, April 22, 2009

Quest Diagnostics Inc., and its subsidiary Nichols Institute Diagnostics (NID), entered into a global settlement with the U.S. government that includes a $40 million criminal fine and a $262 million fine to resolve False Claims Act allegations.

NID pleaded guilty to charges of felony misbranding of one of its products, a test called Nichols Advantage Chemiluminescence Intact Parathyroid Hormone Immunoassay. Laboratories use the test to measure parathyroid hormone (PTH) levels in patients. According to the U.S. Department of Justice (DOJ) press release, the tests provided elevated results that lead to unnecessary medical treatments for patient who were thought to have high levels of PTH.

The DOJ asserts NID manufactured, marketed, and sold the test kits despite knowing they produced inaccurate and unreliable results. Along with the settlement, Quest also entered into a corporate integrity agreement (CIA) with the OIG.

The April 15 settlement comes nearly five years after whistleblower Thomas Cantor filed a qui tam suit. Cantor will receive a $45 million share of the settlement.

Cantor's determination was key in bringing this False Claims Act case to a settlement, says Norm Werner, FACHE, corporate compliance director for Continuum Health Partners in New York.

"This was years in the making," he says. "Cantor really persevered."

It all started when Cantor found a dramatic increase in parathyroidectomies after laboratories began using NID's test kits. Physicians performed the surgeries because the test kits lead them to believe they were necessary, Werner says.

With the government consistently cracking down on healthcare fraud and abuse, this large settlement is a significant victory, he says.

"This will definitely be a deterrent going forward," he says.

The CIA should also help in preventing future similar cases. "Now they have to be that much more compliant by having to adhere to the CIA," Werner says.


Kristen Kohrt is the associate editor for Healthcare Auditing Strategies and Healthcare Auditing Weekly, and manages the Healthcare Auditing Resource Center. You can contact her at kkohrt@hcpro.com.

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