Medical Industry Whistle-Blower Awarded $45 Million in Record-Setting Quest Diagnostics Lawsuit

The owner of a medical laboratory will be paid $45 million for blowing the whistle on Quest Diagnostics for circulating false and misleading marketing of a hormone test the company developed.

Thomas Cantor, the founder and owner of Scantibodies Laboratory Inc., exposed problems with Quest’s marketing of the Nichols Advantage Chemiluminescence Intact Parathyroid Hormone Immunoassay. Quest and its subsidiaries were accused of inaccurate labeling and promoting unproven advantages of the test.

Cantor, in his civil lawsuit filed under the qui tam laws against Quest on behalf of the United States government, claimed that some dialysis patients had been forced to undergone unnecessary surgeries to remove their parathyroid and were given unnecessary treatment as a result of Quest’s mislabeling of the test.

Based on Cantor’s suit, the Justice Department launched an investigation in 2004, and in 2005, Quest recalled the test.

Big Fines to Be Paid

Quest has agreed to pay $302 million fine to settle the mislabeling accusations. It is one of the largest recoveries ever in a case involving a medical device, officials said. Nichols Institute Diagnostics, a subsidiary of Quest, will pay $262 million plus interest for its role in marketing the misleading product claims, officials said.

Quest also will repay Medicaid programs about $6.2 million for claims paid regarding the test. In 2008, Quest earned $7.25 billion, so the fines represent just about four percent of the company’s annual revenue.

Whistle-Blower (Qui Tam) Suits

Federal and state whistle-blower qui tam laws reward parties who step forward to expose wrongdoing against the government with a share of settlement proceeds from fines paid by offending parties. Cantor is receiving a share of the record-setting fine paid by Quest.

“The American public has the right to expect medical device manufacturers to make accurate claims in their labeling, especially when the failure to meet those claims could indicate that the performance of the device is suspect,” said U.S. Attorney Benton J. Campbell.

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