The Department of Justice announced last week that it had entered into a civil and criminal settlement with Quest Diagnostics, Inc., and its subsidiary, Nichols Institute Diagnostics (NID). Quest and NID will pay a total of over $300 in a multi-part settlement: $262 million plus interest to settle civil allegations under the False Claims Act that NID knowingly manufactured and sold five test kits that produced unreliable results from 2000 to 2006; approximately $6.2 million to various state healthcare programs related to similar civil claims; and a $40 million criminal fine for violating the Food, Drug and Cosmetic Act in its false marketing of NID’s Advantage Intact Parathyroid Hormone (PTH) Immunoassay. Thomas Cantor, the founder of Scantibodies Laboratory Inc., was the qui tam relator who blew the whistle on Quest and NID and will receive approximately $45 million for his efforts.
The False Claims Act settlement also focuses on the Advantage Intact PTH test kit, along with the Bio-Intact PTH kit, and three other test kits manufactured by NID. All five of the kits manufactured by NID were found to be materially inaccurate and unreliable at various times between May of 2000 and April of 2006. The faultiness of these test kits caused laboratories and healthcare providers to submit false reimbursement claims to federal health programs like Medicare for the diagnostics and the unnecessary treatments prompted by the erroneous diagnostics. As part of the civil settlement, Quest has also signed a Corporate Integrity Agreement with the Department of Health and Human Services Office of the Inspector General.
Cantor, the qui tam relator, filed the case in federal court in Brooklyn in 2004, but he had been trying since 2000 to bring the problems with these diagnostics to the attention of the medical community. He had little success convincing healthcare providers of this problem through correspondence, articles, and presentations. It was only through online research that Cantor learned that the False Claims Act could prompt a government investigation of his allegations, and that is precisely what took place, leading up to one of the largest settlements in U.S. history in a case involving medical devices.