Quest Diagnostics Inc. Settles Billing Case for $13M
Laboratory operator Quest Diagnostics Inc. agreed yesterday to pay $13.1 million to settle allegations that its subsidiary, the Nichols Institute, which operated in California, Alaska, Oregon, Texas and Washington, "defrauded" federal health programs through inflated billings, the AP/Orange County Register reports. Certain Nichols laboratories allegedly began overbilling Medicare, Medicaid, Tricare and the Federal Employees Health Benefits Program in 1989 and continued inflating prices until 1995, shortly after Quest acquired the company. The government investigated Nichols on charges of "unbundling," a practice that enables laboratories to obtain higher reimbursements for services by billing separately for groups of lab tests that have been performed together. Quest officials denied that Nichols had engaged in the practice. Quest President and CEO Surya Mohapatra said, "We strongly deny the government's contentions and are settling this case to put behind us a matter that traces its origins back to 1989." Mohapatra added that the billing methods in question were "common industry practice," although Quest ended them after the company acquired Nichols. Assistant Attorney General David Ogden said of the case, "The federal health care system operates on the good faith and honesty of its providers, and we cannot tolerate misuse of the reimbursement system for financial gain" (Sniffen, AP/Orange County Register, 1/4).