Quest Diagnostics Finalizes Agreement to Settle California Lawsuit Related to Medi-Cal Billing

The company agreed to the settlement to resolve claims pertaining to the "comparable charge" allegations.

Quest Diagnostics

(MADISON, N.J.) - Quest Diagnostics Incorporated (NYSE: DGX) today announced it has finalized an agreement to settle a previously disclosed civil lawsuit, brought by a California competitor against a number of California clinical laboratories, in which the State of California intervened, for a payment of $241 million.

The company had announced an agreement in principle to resolve the lawsuit on May 9, 2011. In the lawsuit, the plaintiffs alleged, among other things, that the company did not comply with California's "comparable charge" regulations, resulting in overpayments for laboratory testing services by Medi-Cal, California's Medicaid program.

"Our laboratory testing services for Medi-Cal were priced appropriately, and we deny all allegations in the complaint," said Michael E. Prevoznik, Senior Vice President and General Counsel of Quest Diagnostics.

"Quest Diagnostics operates with the highest standards of integrity and fairness. California's interpretation of the Medi-Cal 'comparable charge' regulations created uncertainty and resulted in an intolerable business environment for us. This agreement allows us to put the lawsuit behind us and provides for an orderly process for resolving any remaining interpretation issues. We also intend to pursue other avenues, including legislative action, to ensure clear regulatory standards in California for the clinical laboratory industry."

The company agreed to the settlement to resolve claims pertaining to the "comparable charge" allegations. The company also agreed to reporting obligations regarding its pricing for a limited time period and, in lieu of such obligations for a transitional period, to provide Medi-Cal with a discount until the end of July 2012. The company received a full release of all the claims alleged in the lawsuit.

Source: Quest Diagnostics, the world's leading provider of diagnostic testing, information and services that patients and doctors need to make better healthcare decisions