U.S. ex rel. Judd v. Quest Diagnostics, Inc. (Summary)

FALSE CLAIMS – QUI TAM

U.S. ex rel. Judd v. Quest Diagnostics, Inc., No. 10-4914 (KM) (D.N.J. May 30, 2014)

The U.S. District Court for the District of New Jersey granted in part and denied in part a diagnostic testing laboratory’s motion to dismiss the qui tam allegations of false claims brought by a physician who alleged that the lab provided his office practice with free supplies and discounted lab services in order to induce the referral of Medicare and Medicaid patients to the lab.

In seeking dismissal, the lab first argued that the doctor’s claims were barred by the public disclosure provision, which prevents a relator from bringing a qui tam action if the fraudulent scheme underlying that action has already been publically disclosed, unless the relator is an original source of the information.  The court held that the claims underlying this lawsuit had already been publically disclosed in two prior lawsuits, but also held that the relator in this case was an original source of information with respect to the specific fraud that occurred at his own medical practice (with the relator providing substantial details of the fraudulent scheme as it was implemented at his office, including identifying specific tests and equipment provided to the practice for free, as well as identifying a number of claims submitted to Medicare/Medicaid by the practice for equipment that had been provided to the practice at no cost by the lab).

The court went on to note that the doctor did not have direct or independent knowledge regarding other medical providers who allegedly entered into similar arrangements with the lab and, therefore, held that the doctor was not an original source of information with respect to any such claims.  Further, the court held that the doctor had not pled with specificity any false claims submitted by the lab to the federal government and, accordingly, the court dismissed all false claims allegations based on claims allegedly submitted by the lab (as opposed to those submitted by the physician’s medical practice).