Quest Diagnostics Pays $11.35MM to Settle Qui Tam Suit

NEWARK – Quest Diagnostics Incorporated, one of the world’s largest providers of clinical diagnostic laboratory services, agreed to pay the government $11.35 million to settle a False Claims Act qui tam lawsuit brought by Kevin Spear, a former salesman for Unilab Corporation. Mr. Spear alleged that one of Quest’s subsidiaries, including Unilab, and two of its predecessor companies defrauded the United States by failing to properly bill Medicare and performing medically unnecessary tests at several of its facilities across the country.

Under the False Claims Act, Spear will receive a 21% share of the settlement, or nearly $2.4 million. "We will continue to encourage citizens like Mr. Spear to come forward when they believe a fraud is being committed that deprives the Medicare and Medicaid programs of essential funds, and costs the Government and taxpayers," Christopher J. Christie, U.S. Attorney for the District of New Jersey, stated.

“Kevin Spear has fought for this case for seven years and devoted over a decade of his life to see that justice was done,” said Mitch Kreindler, one of Spear’s attorneys. “Hopefully, Kevin’s successful experience will embolden other would-be whistleblowers to step forward to do what is right.”

Spear’s complaint alleges that during the period January 1990 to December 1997, laboratories owned or operated by Unilab and Quest’s predecessors, Damon, Inc. and Metpath, Inc., submitted or caused to be submitted false claims to Medicare and California Medicaid, known as MediCal, for medically unnecessary: (1) apolipoproteins, included in test profiles and panels designed to test for coronary conditions; (2) urine microscopy examinations; and (3) calcium and parathormone (“PTH”) tests, when calcium test results were elevated, resulting in higher Medicare and Medicaid reimbursement than permissible. There were also allegations that the defendants automatically calculated free thyroxine indices (thyroid test panel or “T7 index”), when such tests should have been included as part of defined organ disease test panels, and billed for unlisted test panels when more specific tests existed and could have been used for billing. Quest Diagnostics, as successor to Metpath and Damon, and on behalf of its subsidiary, Unilab, denied any wrongdoing.

The lawsuit was originally filed under seal under the whistle blower provisions of the False Claims Act. The complaint alleged violations of the False Claims Act, which permits recovery of triple the amount of the damages to the Government plus penalties. The settlement was unsealed on March 3, 2004 by U.S. District Judge Joseph A. Greenaway, Jr.

Spear was represented by Mitch Kreindler of Kreindler & Associates in Houston, TX and Malvern, PA, Mary Louise Cohen of Phillips & Cohen in Washington, D.C. and Arthur Zucker of Ferro, Labella & Zucker in Hackensack, NY. The case was handled for the government Assistant U.S. Attorney Michael A. Chagares, chief of the U.S. Attorney's Civil Division in Newark, Assistant U.S. Attorney Minkowitz, and Richard Linzer, Senior Counsel, Office of Counsel to the Inspector General, Department of Health and Human Services. Hope S. Foster of Mintz Levin in Washington, DC represented the defendants.

Not certified by the Texas Board of Legal Specialization.

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