Quest Diagnostics Hit with Antitrust Class Action Lawsuit

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Last week, a federal antitrust lawsuit was filed against medical testing company, Quest Diagnostics Inc., alleging that the company created a monopoly for medical diagnostic services through kickbacks to providers, secret deals with insurance, and unfairly buying up the competition.

Lead plaintiffs, patients Colleen Eastman, Christi Cruz, and Carmen Mendez, alleged in their class action lawsuit filed in Northern California’s federal court that Quest Diagnostics forced out competing medical diagnostic service companies by entering into unfair deals with large insurance companies, like Aetna Inc. and Blue Shield of California. The Quest Diagnostics antitrust class action lawsuit also alleges that the company told physicians and medical providers that they would terminate their plan contracts. As an example, the plaintiffs allege that insurance company Aetna Inc. switched approximately 400 other medical diagnostic service providers from “in-network” to the more costly “out-of-network” status as a result of a deal with Quest Diagnostics.

“As a result of these exclusionary practices, since at least 2011, Quest has been able to charge above-competitive prices to members of the class while providing inferior quality service,” argue the plaintiffs in their antitrust class action lawsuit. “Physicians often complain about poor routine testing services by Quest,” continue the plaintiffs, “but the exclusionary conduct of Quest very often leaves physicians with no other options. Because physicians have few other options, Quest is free to prioritize volume over quality of testing.”

The plaintiffs also allege that healthcare providers were offered unfair kickbacks by Quest Diagnostics. According to the class action lawsuit, Quest offered deeply discounted and even free services to health care providers to unfairly induce the providers into only using Quest’s inferior services.

“The purpose of the kickbacks is to induce medical providers to send all their pullthrough, plan/out-patient billing business to Quest,” allege the plaintiffs in the class action lawsuit. However, “[t]hese kickbacks functionally are no different than if Quest were to give cash to medical providers in exchange for their agreement to steer such business to Quest,” the plaintiffs argue, which is a violation of California business law.

The plaintiffs allege that Quest bought up competing companies as well. According to the class action lawsuit, in 2013 Quest purchased two competing providers, Unilab and Dignity Health hospital system to increase their market share.

The plaintiffs argue that Quest’s alleged unfair deals, kickbacks, and company take-overs constitute violations of the Sherman Act, state competition and business practices laws, and the California Cartwright Act, an antitrust law.

Quest was hit with another antitrust lawsuit in February of last year. That lawsuit alleges that that Quest engaged in similar antitrust actions as well as in predatory pricing. The judge in that case dismissed the claims related to competition, but other claims are proceeding in that case.

Lead plaintiffs, Colleen Eastman, Christi Cruz, and Carmen 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.