A Diagnostics & Imaging Week
Quest Diagnostics (Madison, New Jersey) and its subsidiary, Nichols Institute Diagnostics (NID), have entered into a global settlement with the U.S. to resolve criminal and civil claims concerning various types of diagnostic test kits that NID manufactured, marketed and sold to laboratories throughout the country until 2006, the Justice Department said. The payment of $302 million will resolve these allegations and represents one of the largest recoveries ever in a case involving a medical device.
As part of the criminal resolution, NID pleaded guilty before U.S. District Judge Sterling Johnson Jr. in Brooklyn to a felony misbranding charge in violation of the Food, Drug and Cosmetic Act relating to NID's Nichols Advantage Chemiluminescence Intact Parathyroid Hormone Immunoassay, a test that was used by laboratories throughout the country to measure parathyroid hormone (PTH) levels in patients. As part of the plea, NID will pay a criminal fine of $40 million. Quest has also entered into a non-prosecution agreement with the U.S.
As part of the civil settlement, Quest and NID will pay the U.S. $262 million plus interest to resolve False Claims Act allegations relating to the Advantage Intact PTH assay and four other assays manufactured by NID that allegedly provided inaccurate and unreliable results. Quest has agreed to pay various state Medicaid programs nearly $6.2 million to resolve similar civil claims. The company has also entered into a Corporate Integrity Agreement with the Office of Inspector General of the U.S. Department of Health and Human Services.
The settlement is said to be 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.
The U.S. commenced its civil and criminal investigation after the filing of a qui tam or whistleblower suit brought by Thomas Cantor. As a result of the settlement, Cantor will share in the proceeds of the False Claims Act recovery and will receive nearly $45 million.
The criminal resolution focuses solely on the Advantage Intact PTH Assay. As alleged in the information, there were periods of time in which the Advantage Intact PTH Assay provided elevated results. The marketing materials that NID distributed regarding the Advantage Intact PTH Assay described that product as having "excellent correlation" to the IRMA Assay. Additionally, the directional insert for the Intact PTH Assay, in a section titled "Accuracy," described a study in which the IRMA Assay and the Advantage Intact PTH Assay produced nearly identical results when used to test PTH levels in samples of human blood. Contrary to the claims in NID's directional inserts and marketing materials, however, in about May 2000, and at various times thereafter, NID was aware that the Advantage Intact PTH Assay was not consistently providing results that were equivalent to those of the IRMA Assay.
Additionally, during some of the periods of time after May 2000, NID was also aware that the Advantage Intact PTH Assay provided elevated PTH results. Nonetheless, NID continued to indicate, in its directional inserts and marketing materials, that the Advantage Intact PTH Assay and the IRMA Assay provided nearly identical results. As part of the guilty plea, NID admitted that in or about May 2000 and at various times thereafter, the company knowingly, intentionally and with intent to mislead, introduced into interstate commerce, and caused the introduction into interstate commerce of the Advantage Intact PTH Assay, that was misbranded.
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.