Quest Diagnostics Reaches Agreement in Principle to Settle California Lawsuit Related to Medi-Cal Billing (DGX)

Quest Diagnostics Incorporated DGX today announced it has reached an agreement in principle to settle a previously disclosed civil lawsuit, brought by a California competitor, in which the State of California intervened.  In the lawsuit, the plaintiffs alleged, among other things, that the company did not comply with California's "comparable charge" regulations, resulting in overpayments for laboratory testing services by Medi-Cal, California's Medicaid program.   As part of the agreement in principle, the company has agreed to pay $241 million to resolve the "comparable charge" allegations. The company also has agreed to reporting obligations regarding its pricing for a limited time period and, in lieu of such obligations for a transitional period, to provide Medi-Cal with a discount until the end of July 2012.  The company will also be provided with a full release of all the claims alleged in the lawsuit.  The agreement in principle is subject to certain approvals by the State of California and final approval by the company's Board of Directors. In the event that a settlement is not finalized, the company will continue to vigorously defend itself in the pending litigation and could incur significant costs in doing so.