Quest Diagnostics and Nichols Institute: Diagnostic Kits and Downstream Claims

In the Quest Diagnostics and Nichols Institute False Claims Act settlement, the companies agreed to pay $262 million in federal civil money to resolve allegations that inaccurate diagnostic kits caused laboratory reimbursement and unnecessary treatment claims. The government’s allegation reached beyond the product sale to claims made by laboratories and treating providers.

The Department of Justice announced the settlement on April 15, 2009. It covered Quest Diagnostics Incorporated and Nichols Institute Diagnostics. For someone working in diagnostic testing, the case connects parts of the business that deserve to be examined together: what a supplier’s product does, how a laboratory uses it and which claims follow.

The Alleged Chain From Kit to Claim

Quest and Nichols supplied diagnostic products used by laboratories and health care providers seeking reimbursement. The government alleged that inaccurate kits caused claims for laboratory testing and for unnecessary treatment. The test itself and the care it prompted were both part of the allegation.

The False Claims Act reaches a company that knowingly causes a false claim as well as one that submits it. That makes the relationship between the supplier and the biller central to this kind of case. We examine how the product reached the laboratory, what the laboratory did with it and how its use connected to claims for government money.

The treatment allegation adds a further connection to investigate. We would want to understand which test result informed a treatment decision, what care followed and what the provider billed. The laboratory bill concerns the test; the treatment record shows how a provider used its result. We connect those records to understand the claims, from the product to the care billed to the government.

We see the absurdity in that allegation: taxpayers could pay for an inaccurate test and then for unnecessary care it set in motion. Billed at both ends. The patient sits in the middle of that sequence.

What a Laboratory Insider Could Show

For a diagnostic-kit case, useful evidence connects the product, the company’s knowledge and the government claim. We work with the person who understands the testing to establish what went wrong, who understood the problem and how it affected claims. The Quest allegations make that connection concrete without requiring every insider to work in billing.

If your work involves assay validation or quality review, you understand the difference between what testing showed and what customers were told. We would examine the validation results, product representations and communications about performance together. The question is what those materials show about the product and the decisions to keep selling or using it.

If you work inside the laboratory, you may understand how a particular kit became a reported result. We would connect that account to the relevant orders, result reports and reimbursement records. If you work on the clinical side, you understand how a result influenced care. Those perspectives help us distinguish the claim for the test from the claim for the treatment that followed it.

The company’s knowledge and the information’s importance to payment belong in that same account. We look at what the business understood when the claims were made and why the inaccurate information mattered to the payment decision.

The Quest Settlement and Whistleblower Award

The Justice Department’s announcement put the federal civil settlement at $262 million, alongside approximately $6.2 million in separate state civil payments and approximately $45 million for the whistleblower. The announced award was the whistleblower’s share of the recovery.

What Share Is Possible?

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. The law ties the whistleblower’s share to the recovery.

The Congressional Research Service’s 2009 report, Qui Tam: The False Claims Act and Related Federal Statutes, explains why the government enlists private people to bring qui tam cases: some enforcement reaches beyond what public officials can accomplish unaided. The share of a recovery is part of that arrangement. It gives someone outside government a stake in bringing the conduct to light.

For a diagnostic-laboratory whistleblower, that gives technical knowledge a practical purpose. What you know about a test, a sales instruction or a treatment decision may explain how government money went out the door. We help turn that account into a case built around the conduct and the claims it caused.

You Know the Test Behind the Claim

If you know how an inaccurate diagnostic product reached testing, treatment or reimbursement, we work with you to connect what happened inside the business to the claims it caused. We stay beside you through the case and bring in False Claims Act whistleblower lawyers who understand laboratory evidence and healthcare reimbursement. Speak to one of our Whistleblower Experts about your strongest laboratory whistleblower case.