RELEASE: $1 Billion Whistleblower Lawsuit Brought Against Quest Diagnostics
July 11, 2011
London, UK (July 7, 2011) – A British businessman has filed a lawsuit against US giant Quest Diagnostics, Inc., accusing the company of overcharging the federal government by at least $1 billion.
As the nation’s leaders struggle to address steep health care costs, a Medicare scam is being conducted right under their noses and no one is doing anything to stop it, says Cambridgeshire-based, Huntingdon Life Sciences boss, Andrew Baker.
The fraud, industry wide, is costing taxpayers as much as $15 billion in Medicare and Medicaid overcharges, they assert. The Medicare scam is featured in this week’s Bloomberg Businessweek.
Since 1996, the federal government has paid more – sometimes as much as 400 to 500 percent more – than private insurers for some Medicare and Medicaid patients’ lab work conducted by Quest Diagnostics, Inc., of Madison, NJ, the nation’s largest lab testing company.
The lawsuit claims that billions of dollars in lab fees have been siphoned back into illegal kickbacks to private insurers, such as Aetna and Cigna, among Quest’s largest contract providers.
“Quest and other labs are ripping off taxpayers, yet the federal government has done nothing. Despite our lawsuit, the scam continues and will until the government makes them pay damages,” said Andrew Baker, one of three former executives of Unilab, purchased by Quest in 2003, who brought the lawsuit.
Baker and his associates formed a company called Fair Laboratory Practices Associates. The FLPA vs. Quest Diagnostics, Inc., case was filed in 2005 under seal before the federal court for the Southern District Court of New York. The court recently unsealed an amended complaint that charges Quest with violations of the Federal False Claims Act and the Federal Anti-Kickback Statute.
The fraud is simple: Quest pressures private insurers to lean on doctors to send all their lab work to Quest, for patients insured privately and by Medicare and Medicaid. In return, the private insurers benefit from lower and, in many cases, below-cost, lab fees, effectively subsidized by higher fees for the Medicare and Medicaid patients. Insurers threaten to throw doctors out of their networks if they refuse to send their tests for Medicare and Medicaid patients to Quest.
Baker wonders why the Federal government has not joined his lawsuit, especially since just last month Quest settled a remarkably similar California state claim for $241 million in overcharges to the state’s Medicaid program. In March 2009, California Attorney General Jerry Brown had intervened in that case and a settlement soon followed, returning hundreds of millions of dollars to the state’s coffers. Baker asserts billions are waiting to be returned to the federal government if they would just act to join the FLPA case.
The California lawsuit alleged Quest overcharged the state by as much as 400 percent for blood, urine and other tests conducted on Medicaid patients. For example, Quest charged the State of California $8.59 for a complete blood test, but billed private insurers only $1.43.
While Baker’s lawsuit names only Quest, the FLPA plaintiffs believe the practice of overbilling Medicare and Medicaid has become widespread throughout the industry, resulting in overpayments of as much as $15 billion. FLPA has appealed a lower court dismissal of their claims based on procedural grounds. The court did not rule on the merits of the case.
The Quest scam could be the largest Medicare fraud committed by one company.
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