Smear test firm paid out $40m in fraud cases
THE US health company awarded the lucrative national contract for testing cervical smears has paid out almost $40m in fraud settlements over the past decade.
Quest Diagnostics, which beat off six other bidders for the multimillion euro contract, has been at the centre of several fraud probes in the US, an Irish Independent investigation has learned.
It made major settlements in 1998, 2001 and 2004 after being investigated in connection with the billing of federal healthcare programmes for unnecessary tests.
The revelation has sparked fury among patients' groups here. Last night they questioned why public money is being paid to a company alleged to have acted fraudulently.
However, the National Cancer Screening Service (NCSS), which selected Quest Diagnostics after a tendering process, defended its decision last night.
NCSS chief executive Tony O'Brien admitted he was made aware by the company of the fraud settlements prior to its selection, but still considered it the best candidate for the contract.
Mr O'Brien also insisted the stringent terms of the contract, which is due to be officially signed in the coming weeks, meant there was no possibility of the Irish taxpayer being defrauded.
Health Minister Mary Harney last night backed the NCSS's decision to award the contract to Quest Diagnostics.
In a statement, the minister said she was satisfied the company was selected "in accordance with EU procurement law and that the process is not flawed".
She refused to say whether she was aware of the alleged fraudulent activity by the New Jersey-based company prior to the awarding of the contract.
When the two-year contract starts, Quest Diagnostics will test between 300,000 and 500,000 Irish smear tests every 12 months.
The tests will then be sent to the US. The company has guaranteed it will fully test each smear and return the results within 10 days of initially receiving the sample. The company is also in discussions to open a base in Ireland.
Patients' groups last night questioned the selection of Quest Diagnostics.
Janette Byrne of Patients Together said: "We would definitely question why public money is being given to a company that has been investigated for acting fraudulently in another country."
In 2004 Quest Diagnostics paid $11.35m (€7.33m) to settle a lawsuit that alleged the company billed Medicare, a federal healthcare programme, for certain blood tests that doctors hadn't specifically ordered.
The case was taken under whistleblower legislation which allows company insiders expose fraudulent behaviour in return for a monetary reward.
The legislation entitles whistleblowers to between 15pc and 25pc of the money subsequently recouped by the US government.
In 2001, Quest Diagnostics paid out $13.1m (€8.46m) to settle allegations of fraud against a company they acquired in 1994.
The settlement came following allegations that several healthcare programmes were routinely billed for laboratory tests which were not deemed necessary.
In 1998, Quest Diagnostics paid $15m (€9.7m) following an FBI investigation to settle allegations related to fraudulent claims which were submitted for laboratory tests provided to patients with end stage renal disease.
Mr O'Brien told the Irish Independent: "Quest made a full disclosure to us about settlements they had entered into with federal authorities and the circumstances in which they were made.
"We are satisfied that they have been open with us about the situation and have disposed of those issues.
"The matters that gave rise to those settlements are not issues that can arise in our contract.
"We have a very tight quality control and audit system so there are no elements of this agreement that would give us concern."
Mr O'Brien said a "unitary price" had been agreed for the testing of each sample.
He declined to reveal how much the contract was worth.
"We have told nobody the value of the contract as we are bound by commercial confidentiality," he said.
A spokesman for Quest Diagnostics said the company was "committed to Ireland" and wants to build a presence here.