Quest Diagnostics Agrees to Settle California Medicaid Suit for $241 Million-Overcharging for Lab Tests

The lawsuit contends that for 15 years Quest Labs over charged Medicaid for blood count and HIV tests. The claim charged that Medicaid paid up to 6 times more for patients tested and being billed for Medicaid. The state law says the billing should have not exceeded rates paid by others. In addition a few other medical labs in California were named in the complaint.

“The complaint gave several examples of the alleged overcharging, including instances in which Quest charged Medi-Cal $8.59 for a blood count test while it charged other customers $1.43 for the same test, and LabCorp charged the state $30.09 for a Hepatitis C test while charging others $6.44.”

How this occurred according to the complaint was that the labs would offer discounts when the charges were being paid directly by doctors and hospitals and the labs expected referral for other patients who were being paid by Medi-Cal. It was a marketing plan that ended up shifting the cost of doing business to Medi-Cal for private consumers to the State. The Quest board still needs to approve the agreement to pay and if not, the lawsuit continues to where they will admit no wrong doing and continue that stance. I guess you can say here’s one more instance where marketing got in the way and this was years ago when it occurred and is so much more widespread today. BD

Law360, New York (May 9, 2011) -- Quest Diagnostics Inc. said Monday it had agreed to pay $241 million to settle a lawsuit brought by a competitor and joined by California that accused the company of overcharging that state's Medicaid program for laboratory testing services.
In a statement, Quest said that the payment, part of an agreement in principle, would resolve allegations that it did not comply with the state's so-called comparable charge regulations, resulting in the overpayments from Medi-Cal. The suit was filed under seal by Hunter Laboratories in November 2005 under California's False Claims Act, alleging it could not compete with labs that were charging much lower rates to other customers than to Medi-Cal.

The proposed agreement is subject to approvals from the state and final approval by Quest's board of directors, the company said.

Quest Agrees To Settle Calif. Medicaid Suit For $241M - Law360