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Quest Diagnostics to Pay $241M in Medi-Cal Overcharging

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By Robin Enos on May 24, 2011 6:43 AM

California's Medi-Cal program will receive $241 million from Quest Diagnostics, to settle an overcharging case, reports the Associated Press.

Quest Diagnostics, the largest provider of medical laboratory services to Medi-Cal, will now pay the largest-ever reimbursement recovery under the state's False Claims Act.

California Attorney General Kamala Harris' announcement this week that Quest Diagnostics has agreed to pay the $241 million, illustrates just how seriously a qui tam action can affect a Medi-Cal provider company.

Quest Diagnostics agreed to pay the $241 Million to settle allegations it overcharged Medi-Cal and paid kickbacks to doctors, hospitals and clinics over a 15-year period.

California's False Claims Act provides a qui tam private right of action, for individuals and/or companies to bring actions in the name of the State of California. The statute requires the plaintiff serve copies of its complaint on the Attorney General's office, which then decides whether to participate in the case.

The original action leading to Quest Diagnostics' settlement was brought under California's False Claims Act, Government Code secs. 12650-12656, commonly called California's "whistleblower statute."

Quest competitor Chris Riedel, and his company Hunter Laboratories of Campbell, California, alleged Quest's unfair business practices were pushing Hunter and other companies out of the market, reports the ABA Journal.

Quest Diagnostics, of New Jersey, denies all wrongdoing despite paying up.

"This agreement allows us to put the lawsuit behind us and provides for an orderly process for resolving any remaining interpretation issues," said Michael E. Prevoznik, Quest's senior vice president and general counsel, as reported by the ABA Journal.

That's a big reimbursement simply "to put a lawsuit behind us." It should also be a cautionary tale for in house counsel representing Medi-Cal providers.

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