Quest Diagnostics Antitrust Class Action Lawsuit Tossed by Federal Judge

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On Tuesday, the class action lawsuit accusing Quest Diagnostics Inc. of unfairly cornering the diagnostic service market in California was dismissed.

In January of this year, lead plaintiffs representing a class of patients alleged in their class action lawsuit that Quest Diagnostics unfairly forced out competing medical diagnostic service companies by entering into shady deals with large insurance companies that resulted in a number of other medical diagnostic companies being reclassified as more costly “out-of-network” service providers. The Quest Diagnostics antitrust class action lawsuit also alleged that the company told physicians and medical providers that they would terminate their plan contracts if they did not use them.

Quest Diagnostics moved to dismiss the antitrust class action lawsuit, and U.S. District Judge William H. Orrick granted that motion early this week. Judge Orrick determined that the plaintiffs had not established they had been harmed by Quest’s allegedly anticompetitive behavior. “Merely alleging that Quest charged above-competitive prices, without alleging facts demonstrating that plaintiffs were injured as a result of Quest’s anticompetitive conduct, is insufficient,” said the judge in his order. “As plaintiffs have pleaded no facts from which I can conclude that they have been injured, they lack both Article III and statutory standing,” he concluded.

Judge Orrick also dismissed the plaintiffs’ substantive antitrust claims, stating, “Plaintiffs have not sufficiently pleaded that the alleged practices, whether independently or in combination, caused antitrust injury or foreclosed competition in a substantial share of the relevant market, the plan/out-patient market in Northern California.”

Judge Orrick pointed out that the plaintiffs had not established that Quest had foreclosed the California medical diagnostic market. “[T]he asserted market share figures relate to the combined plan/out-patient and physician billing markets,” said the judge. “Plaintiffs’ monopolization claims relate to the allegedly separate plan/out-patient market. Accordingly, their allegations do not establish foreclosure of substantial share of the relevant market,” he concluded.

Similarly, Judge Orrick dismissed the plaintiffs’ claim to represent health plans, as well as those requiring out-patient diagnostic services. “[T]he complaint here does not allege facts from which I can conclude that the alleged injuries suffered by the named plaintiffs and health-plans are identical,” wrote the judge in his order dismissing the antitrust class action lawsuit.

“Any injury to health plans would depend on the pricing agreements the health plans have with Quest and how those prices have been affected by the challenged conduct,” Judge Orrick continued. “Given the different nature of the relationship between individual patients and Quest on one hand and between health plans and Quest on the other, plaintiffs’ conclusory statement that the injuries are identical is insufficient to confer standing for health plans,” the judge concluded.

The plaintiffs have been given the opportunity to address the standing issue and problems with their antitrust claims by amending their Quest Diagnostics class action lawsuit within 20 days of the judge’s order.

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.