Quest Diagnostics has finalized agreements to pay a record $241 million to settle long-running allegations that it bilked California's Medicaid program by overcharging the state for laboratory testing services and paying kickbacks to doctors in exchange for patient referrals.
Quest finalizes $241 million settlement
Quest, Madison, N.J., denies the allegations and says the controversy amounts to a difference of interpretations of a California law that says companies must offer the state Medicaid program, Medi-Cal, comparable rates to similar payers. In a news release, the company said it paid the record-setting amount because the state's interpretations of the law created uncertainty and “an intolerable business environment” for the company.
A competing private laboratory filed a claim under California's False Claims Act in 2005 claiming that, in one example, Quest charged Medi-Cal as much as $8.59 for a complete blood count test for which other customers paid $1.43. Quest offered physicians lower prices on some services in exchange for referrals of Medi-Cal patients, who could be billed for higher prices, according to the lawsuit.
State officials subsequently intervened in the complaint against the state's largest laboratory services provider, and they will receive $171 million of the settlement, which was announced “in principle” on May 9 by Quest. California regulators have similar lawsuits pending against four other companies, including the state's second-largest provider, Laboratory Corporation of America, whose trial is set for next year, according to a news release.
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