Medical device maker settles $302M case

WASHINGTON, April 15 (UPI) -- Quest Diagnostics agreed to pay $302 million to settle allegations that a subsidiary sold misbranded test kits, the U.S. Justice Department said Wednesday.

As part of the criminal resolution, the subsidiary -- Nichols Institute Diagnostics -- pleaded guilty before a federal judge in New York to a felony misbranding charge for a medical diagnostic test used by laboratories across the country until 2006, the Justice Department said.

As part of the plea agreement, Nichols Institute Diagnostics will pay a criminal fine of $40 million, the department said. Quest also entered into a non-prosecution agreement with the United States.

As part of the civil settlement Quest and NID will pay the United States $262 million plus interest to resolve False Claims Act allegations that test kits manufactured by NID allegedly provided inaccurate and unreliable results, the Justice Department said. Quest also agreed to pay state Medicaid programs approximately $6.2 million to resolve similar civil claims.

A federal civil and criminal investigation against Quest and NID began after a whistle-blower suit was filed.

"Pursuing this case was particularly important in light of the potential for adverse health consequences to beneficiaries of federal healthcare programs," said Michael Hertz, acting assistant attorney general for the Civil Division.