Quest Diagnostics, Inc. Pays over $13 Million to Settle Allegations of Providing Illegal Kickbacks to Doctors and Health Care Executives

NEWARK, NJ - Quest Diagnostics, Inc., based in Secaucus, New Jersey, has paid $13,014,576 plus interest to resolve allegations that Quest submitted false claims to the Medicare and New York and New Jersey Medicaid programs, U.S. Attorney Robert Frazer announced today. As alleged, Quest offered health care providers and executives illegal kickbacks in the form of valuable and exclusive entertainment events - including free tickets to suite seats at MetLife Stadium for New York Giants home games - to induce referrals of business to Quest, that federal healthcare programs paid for.

"This agreement is yet another example of our office's commitment to enforcing the False Claims Act and the Anti-Kickback Statute to protect taxpayer dollars and the Medicare and Medicaid programs from fraud, waste, and abuse. Kickbacks to referring providers, especially by lab companies, corrupt medical judgment, lead to unnecessary lab testing, cause providers to steer patients to labs that offer inducements, and squander taxpayer money."

- U.S. Attorney Robert Frazer

The Anti-Kickback Statute prohibits offering, paying, soliciting, or receiving anything of value to induce referrals of items or services covered by Medicare, Medicaid, and other federally funded healthcare programs. The AKS is intended to ensure that the best interests of patients, and not improper financial incentives, drive the medical judgement of healthcare providers.

The settlement announced today resolves allegations that, between July 25, 2013 and August 3, 2022, Quest violated the AKS by knowingly and willfully offering and giving healthcare providers and other decisionmakers valuable and exclusive entertainment events to induce patient referrals to Quest. Then, Quest submitted or caused the submission of false claims for lab services that Medicare and New York and New Jersey Medicaid paid for.

In particular, the settlement resolves allegations that:

• In 2013, Quest entered into a Naming Rights and Sponsorship Agreement with the New York Giants. As part of the overall agreement, the Giants provided suites to Quest at MetLife Stadium for home games. Quest also gained various marketing, commercial programming, and hospitality benefits.
• Through the benefits Quest gained from its agreement with the Giants, Quest offered and provided valuable and exclusive entertainment at Giants home games and other commercial hospitality events free of charge to decisionmakers from Quest's client accounts who could refer patients for lab testing to Quest, or who could arrange for or recommend referrals.
• The events included:

1. Game Day Suite Seats: Seats in Quest's suites at MetLife Stadium to watch Giants' home games, where Quest also provided food, alcohol, and other beverages, and, in certain instances, parking or field access to watch pre-game warmups.
2. VIP Training Camp: Events that gave VIP customers the opportunity to watch the Giants practice from a dedicated VIP section of the training camp - right next to the field for better viewing and player interaction opportunities. The event included breakfast or lunch and the opportunity to get player autographs and meet some of the players.
3. Draft Chalk Talks: NFL style chalk-talk presentation and interactive session hosted by former New York Giants "legends," where they walked Quest customers through draft strategy, draft predictions, and their own thoughts on that year's lineup. Invitees sat in on an interactive mock draft and heard stories about the legends' own draft experiences. The event included dinner at the Giants' training center cafeteria, a meet-and-greet with alumni players, and an insider's tour of the training center.
4. Family Combine Days: Events in which clients and their family members could participate in football drills led by Giants players. Family Combine Days also included opportunities for photos and autographs and a tour of the training center.

The settlement further resolves allegations that:

• Quest provided these free entertainment events to its clients, and in certain instances, to family members and guests of its clients, to induce business referrals to Quest. The company targeted decisionmakers from current and prospective client accounts who had the power to drive the account's business to Quest. Company executives and sales representatives targeted key decisionmakers from Quest's highest-value client accounts for these events, to maximize Quest's return on investment (ROI) from providing the events to its clients. Quest sales representatives were required to attend the events with the individuals they invited, and they tied specific sales goals to the Giants invitations and shared those goals with Quest's senior management.
• For the 2013 through 2016 football seasons, Quest measured its ROI from providing free Giants events to its clients. Quest calculated the revenue it received from client accounts after entertaining client decisionmakers at the Giants events for up to one year after the event, and Quest compared the revenue gained after the event to the revenue received from the client account before the event.
• Quest billed Medicare and New York and New Jersey Medicaid for claims for lab testing that were referred from client accounts that Quest entertained for free at Giants entertainment events.

Along with the civil settlement, Quest entered into a five-year Corporate Integrity Agreement (CIA) with the U.S. Department of Health and Human Services-Office of Inspector General (HHS-OIG). The CIA requires an independent review organization to evaluate Quest's risk assessments and audits relating to their exchange of remuneration with referral sources.

"Violations of the Anti-Kickback Statute compromise medical judgment and threaten the integrity of federal health care programs," said Naomi D. Gruchacz, Special Agent in Charge of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG). "HHS-OIG is committed to ensuring that health care decisions are based on patient needs - not improper financial incentives - and will continue working with our law enforcement partners to protect these programs."

"The FBI is committed to rooting out health care fraud in NJ and beyond. It is essential that Americans can trust in the health care system and that anyone exploiting it by making false claims and utilizing kickbacks, is held accountable. This $13 million dollar settlement is a valuable representation of this commitment," said Newark FBI SAC Stefanie Roddy.

The allegations were originally made in a lawsuit filed under the whistleblower provisions of the False Claims Act, which permits private parties, called relators, to file suit on behalf of the United States for false claims and share in a portion of the government's recovery. In this matter, the relators, Gerard Abate, M.D., Lori Anderson, and Douglas S. Rabin, M.D., are receiving a combined total of $2,472,769 as their share.

U.S. Attorney Frazer credited special agents of the FBI, under the direction of FBI-Newark Special Agent in Charge Stefanie Roddy, special agents of the U.S. Department of Health and Human Services - Office of Inspector General, under the direction of Special Agent in Charge Naomi D. Gruchacz, and civil investigator Jeffrey DeFuria, and agents and investigators with the U.S. Attorney's Office, District of New Jersey, with the investigation leading to the settlement. U.S. Attorney Frazer also credited HHS-OIG's Office of General Counsel for its assistance in this matter.

The Department of Justice has established the National Fraud Enforcement Division. The core mission of the National Fraud Enforcement Division is to zealously investigate and prosecute those who steal or fraudulently misuse taxpayer dollars. The National Fraud Enforcement Division will fulfill that mission by coordinating with agencies responsible for administering benefit programs; partnering with federal, tribal, state, territorial, and local law enforcement on fraud-fighting efforts; developing systems and processes that ensure efficient identification of fraud against taxpayer dollars; and equipping prosecutors and law enforcement with state-of-the-art tools and resources needed to bring criminal actors to justice. The attorneys in the National Fraud Enforcement Division will work every day to protect the financial integrity of our government and the tax system that supports it.

The government is represented by Assistant U.S. Attorney Susan J. Pappy of the Health Care Fraud and Opioids Enforcement Unit, and Assistant U.S. Attorney George L. Brandley, Chief of the Health Care Fraud and Opioids Enforcement Unit.

The government's pursuit of this matter illustrates its efforts to combat healthcare fraud. One of the strongest tools in this effort is the False Claims Act. Tips and complaints from all sources about potential fraud, waste, abuse, and mismanagement can be reported to the Department of Health and Human Services, at 800-HHS-TIPS (800-447-8477).

The qui tam case is captioned U.S. ex rel. Rabin, et al v. Quest Diagnostics, Inc. and John Doe Companies 1-10, Civil Action 20-cv-02752 (D.N.J.).

The claims resolved by the settlement are allegations only, and there has been no determination of liability.

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Counsel for Gerard Abate, M.D., Lori Anderson, Douglas Rabin, M.D.: William L. Hurlock and Christopher Furlong, Frier Levitt LLP

Counsel for Quest Diagnostics, Inc.: David Feder, Fenwick & West LLP; Daniel Kahn and Chase McReynolds, Davis Polk & Wardwell LLP; and Craig Carpenito, King & Spalding LLP