Bloomberg News

Quest Pays $241M to End California Medi-Cal Complaint

June 15, 2011

(Corrects to say May 19 settlement announcement was inadvertently reposted temporarily on attorney general’s website and not e-mailed.)

June 15 (Bloomberg) -- Quest Diagnostics Inc., California’s largest provider of medical laboratory testing, agreed to pay $241 million to settle state claims that it overcharged California’s medical program for the poor, Attorney General Kamala Harris said in a May 19 settlement announcement that was inadvertently reposted temporarily today on her web site.

The accord is the largest recovery in the history of California’s False Claims Act, Harris said. The settlement resolved a 2005 lawsuit filed by a whistle-blower alleging that Madison, New Jersey-based Quest overcharged the Medi-Cal program for more than 15 years and gave kickbacks in the form of discounted or free testing to doctors, hospitals and clinics that referred patients to the labs, Harris said.

Quest, which announced the settlement last month, denied wrongdoing, according to the agreement. The company will take an after-tax charge of $195 million, or $1.19 a share, reducing by the same amount its income from continuing operations reported on April 20, Quest said in a May 9 statement.

The charge results in Quest restating its earnings to a loss for continuing operations of $53 million, or 33 cents a share, from the previously reported profit of $141 million, or 86 cents a share, the company said in the statement.

--With assistance from Andrew Pollack in San Francisco. Editors: Glenn Holdcraft, Andrew Dunn

To contact the reporter on this story: Karen Gullo in San Francisco at kgullo@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net


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