Quest Diagnostics Settles, Version 2

And the latest entrant in the parade of legal settlements is a medical laboratory company, as reported by the Los Angeles Times:

Quest Diagnostics Inc., the biggest provider of medical lab services in California, has agreed to pay $241 million to settle a whistle-blower's lawsuit that accused it of overcharging the state Medi-Cal program.

This was not only about financial misbehavior, but about paying physicians and health care providers to influence their decisions in favor of the payer, but not necessarily their patients:

The lawsuit also alleged that the Madison, N.J., company paid illegal kickbacks to doctors, hospitals and clinics that sent patients their way.

As usual, despite the allegations above, the company issued the de rigeur denials:

Quest acknowledged the settlement in a statement but denied any wrongdoing.

'Our laboratory testing services for Medi-Cal were priced appropriately, and we deny all allegations in the complaint,' said Michael E. Prevoznik, Quest's senior vice president and general counsel.

Quest said it settled 'to put the lawsuit behind us.'

Of course, lawyers are expensive. But it is awfully hard to believe a trial would cost more than a small fraction of the amount paid out. So it is very hard to believe that the company paid nearly a quarter of a billion dollars just to avoid the expense and inconvenience of going to court.

That the company paid so much to avoid contesting an action that alleged such kickbacks seems at odds with the company's earnest "corporate citizenship" statement:

Honesty and integrity are the cornerstones of our corporate philosophy. We strive to do the right thing when it comes to caring for our patients, dealing with our business partners and working alongside our fellow employees. We never forget that we’re in the business of caring for people. Every day, we work hard to earn your trust and maintain our reputation for providing unsurpassed diagnostic insights and innovation.

What does not contesting allegations about kickbacks to doctors and hospitals have to do with "honesty and integrity," doing "the right thing," or "earn[ing] your trust?"

That would be a particularly good question to put to certain members of the Quest Diagnostics board of directors who have roles that ought to suggest they might have a certain level of discomfort with not  contesting allegations of giving kickbacks to physicians and hospitals, e.g.:

• John C Baldwin MD, the surgeon who is "Senior Advisor for Health Affairs to the Texas Tech University System,"
• Jenne K. Britell, Ph.D.,"a trustee of the Fox Chase Cancer Center,"
• Rosanne Haggerty, "the founder and President of Common Ground Community, a not-for-profit organization that develops strategies to end homelessness,"
• Surya N. Mohapatra, Ph.D., CEO and Chairman of the Board, also "a Trustee of Rockefeller University," and
• Gail Wilensky Ph.D., a well-known health policy expert who has been vocal in health care reform discussions, and is "a Senior Fellow at Project HOPE."

Of course, as the parade of legal settlements continues, it has been markedly unusual for any of the board members of the organizations involved, no matter how distinguished their credentials in the health arena, to have anything to say about them.

Also, as is tediously usual in such cases, I could find nothing to suggest any negative consequences for any individual who might have authorized, directed, or implemented the bad behavior, and specifically, that might have had anything to do with the kickbacks that were alleged to have occurred.

The continuing march of legal settlements now seems to have included most of the previously well reputed commercial health care firms in the US. The length of this march is an indication of how pervasive is bad behavior by such health care organizations, especially when the marchers were accused of behavior that appeared clinically, not just financially unethical.

I assert again that pervasive bad behavior by large health care organizations has got to be a major cause of our ongoing health care dysfunction.

As we have said repeatedly, even large monetary penalties paid by corporations are unlikely to do anything other than somewhat increase their costs of doing business.  (Note that this is the second settlement by Quest Diagnostics we have discussed on Health Care Renewal.  The first settlement, for over $300 million, was in 2009 and involved felony misbranding charges by a Quest subsidiary.  In that case too no actual persons suffered any negative consequences.)

So, to really deter bad behavior, those who authorized, directed or implemented bad behavior must be held accountable.    As long as they are not, expect the bad behavior to continue. 

(We said that in 2009 about the first Quest Diagnostics settlement, and now it seems to have been a good prediction.  You heard it here first on Health Care Renewal.)