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Quest Diagnostics Ducks Medical Monopoly Suit

SAN FRANCISCO (CN) - A federal judge dismissed class action antitrust claims against Quest Diagnostics for a third and final time, finding patients never showed the company overcharged for its medical tests or shut out competition.

"Despite the benefit of a prior related case bringing substantially similar claims against Quest, three opportunities to flesh out their claims, and two dismissal orders pointing out the deficiencies in their complaints, plaintiffs have been unable to state a plausible claim for relief, and have persisted in accusing Quest of the same basic misconduct without meaningfully adding to the facts stated in support," U.S. District Judge William Orrick said in his ruling. "There is no indication that another chance to amend would yield a different result."

Lead plaintiff Colleen Eastman sued Quest Diagnostics in January 2015, claiming it monopolizes medical testing in Northern California by giving kickbacks to doctors and paying insurers to get rid of competition, and overcharges patients for inferior service.

Orrick dismissed Eastman's complaint with leave to amend in June 2015, finding the plaintiffs lacked standing because they failed to show an injury resulting from Quest's conduct.

The judge also found the plaintiffs failed to allege what prices Quest charged for tests or how they compared to competitive prices.

In November 2015, Orrick dismissed the action with leave to amend a second time, once again finding that the class' amended complaint didn't include specific facts to support its alleged injuries.

On Tuesday, Orrick delivered the final blow and dismissed the action with prejudice.

"Plaintiffs have not alleged facts from which it can be plausibly inferred that Quest's alleged exclusive dealing arrangements with medical providers have foreclosed a substantial share of the plan/outpatient market," Orrick wrote. "Plaintiffs have not identified, for example, the approximate number of medical providers that have entered into such arrangements with Quest, the approximate number and/or characteristics of the other laboratories operating in the physician billing and plan outpatient markets, or what competing laboratories have been adversely affected by the arrangements or the extent to which they have been affected."

Orrick also found the class' collusion and acquisition theories hadn't changed much since the first amended complaint, and did not show that Quest unreasonably restricted competition.

Allegations of kickbacks, collusion with major private health insurers Anthem and Blue Shield and acquisition of competitors were also raised against Quest by competing labs in a related case, Rheumatology Diagnostics Lab., Inc. v. Aetna, Inc. In his order Tuesday, Orrick noted that he had twice dismissed claims in that case with leave to amend.

Lead plaintiff attorney Robert Berry did not respond to a phone request for comment.

Richard Raskin, the lead attorney for Quest, said in an email statement: "We are pleased with the court's decision, which is in line with its prior decisions rejecting antitrust claims against Quest Diagnostics. Judge Orrick carefully reviewed the facts and the law and concluded that there were no grounds for such a claim. We believe this decision should put the issue to rest."

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