Antitrust Class Action Against Quest Diagnostics Dismissed

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On Nov. 25, an antitrust class action lawsuit against Quest Diagnostics was dismissed for the second time.

In the original class action lawsuit filed in January, lead plaintiffs Colleen Eastman, Christi Cruz, and Carmen Mendez alleged that Quest Diagnostics has monopolized the market for medical diagnostic services.

Specifically, the antitrust class action lawsuit states that Quest Diagnostics has made deals with the largest insurance companies to make other diagnostic companies “out of network” and more costly, and paid kickbacks to hospitals and medical providers to use Quest Diagnostics more than its competitors.

U.S. District Judge William J. Orrick dismissed the Quest Diagnostics class action lawsuit in June because the plaintiffs did not say how they were harmed by Quest Diagnostics’ alleged conduct and because the complaint did not show that Quest Diagnostics had actually affected the market at all. He gave the plaintiffs an opportunity to add to and refile a new complaint, which they did on July 6, 2015.

In the new antitrust class action lawsuit, the plaintiffs again alleged that Quest Diagnostics has monopolized the market for medical diagnostic services in Northern California, but it added evidence to support those claims.

The plaintiffs had an expert look at pricing data across the country, compared diagnostic prices in five comparable regions, and found that prices were highest in Northern California. The antitrust class action lawsuit also stated that prices increased in Northern California 26 percent more than in other regions of the county, because of the conduct of Quest Diagnostics.

The new Quest Diagnostics class action lawsuit also included information on the plaintiffs, and alleged how they were harmed: “Because the amounts they paid were variable and based on the prices of the tests, Quest’s above-competitive prices caused plaintiffs to pay a higher amount than they would have paid absent Quest’s anticompetitive conduct.”

However, Judge Orrick did not agree with the allegations in the new antitrust class action lawsuit, either. “Plaintiffs urge that their new allegations should change the analysis of the alleged exclusionary practices to allow the case to proceed,” Judge Orrick stated in his order. “But the slender reeds added to the [new complaint] do not bear the weight necessary to make their claims plausible.”

Judge Orrick disagreed that the class action lawsuit’s new data showed any illegal conduct, because the data did not show Northern California prices were higher for every test, and because the data was regional and not tied to Quest Diagnostics. The complaint also listed three competitors of Quest Diagnostics that went out of business, but did not explain how the loss of those three companies harmed the market or increased prices.

The Quest Diagnostics antitrust class action seeks to represent a Class of “health plans and outpatients residing in Northern California who have paid Quest directly for routine diagnostic testing on or after January 29, 2011 … under plan/outpatient billing arrangements where the payment to Quest was not entirely comprised of a fixed, per-visit copayment amount, but depended at least in part on the total amount due Quest.”

Judge Orrick gave the plaintiffs until Jan. 8, 2016 to file an amended class action lawsuit against Quest Diagnostics.

Eastman, Cruz and Mendez are represented by Colleen Duffy-Smith of Morgan Duffy-Smith & Tidalgo LLP, J. Ross Wallin and Silvia Ostrower of Grais & Ellsworth LLP, and R. Stephen Berry of Berry Law PLLC.

The Quest Diagnostics Antitrust Class Action Lawsuit is Colleen Eastman, et al. v. Quest Diagnostics Inc., Case No. 3:15-cv-00415, in the U.S. District Court for the Northern District of California.