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Businessman Exposed Problems With Quest Subsidiary's Blood Test Kits; Led to $302 Million Settlement
Date:4/15/2009

NEW YORK, April 15 /PRNewswire/ -- The impetus for the massive federal investigation that led to today's $302 million settlement by Quest Diagnostics Inc. was a "qui tam" (whistleblower) lawsuit filed by a California businessman and biochemist, the government revealed today.

The qui tam lawsuit provided detailed allegations about problems with medical test kits that a Quest subsidiary, Nichols Institute Diagnostics Inc. (NID), manufactured and sold to medical testing labs across the country from 2000 to 2006 despite complaints of inaccurate test results, putting the health of hundreds of thousands of dialysis patients at risk.

As a result of the faulty tests, the lawsuit said, some dialysis patients underwent unnecessary surgery to remove their parathyroid and were administered unnecessary treatment that can cause a painful, deadly disease. Today's settlement covers claims that the bad tests led to overtreatment and unnecessary surgeries.

The "qui tam" (whistleblower) lawsuit was kept under seal and unknown to the public until today when a federal judge approved the settlement and the Justice Department announced it.

The settlement is the largest one ever paid by a medical lab company for a faulty product. Previous large Medicare fraud settlements paid by lab companies involved billing practices. The settlement includes $253 million to settle the qui tam lawsuit, $9 million to settle other civil lab claims and $40 million to settle a felony criminal charge.

As a result of the government's investigation into the NID test kits, Quest shut down its 30-year-old profitable subsidiary in 2006. At the time, NID was the leading manufacturer of kits used to conduct certain essential blood tests for dialysis patients.

Thomas Cantor, founder, president and owner of Scantibodies Laboratory Inc., filed the qui tam lawsuit against Quest and NID in 2004 in federal distric
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SOURCE Phillips & Cohen LLP
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