(CN) – The government reached a $302 million settlement in federal court on Wednesday with Nicholas Institute Diagnostics, a subsidiary of Quest Diagnostics, settling claims that the manufacturer knowingly made and sold inaccurate in vitro diagnostic test kits. The government said the kits caused clinical laboratories and health-care providers to submit false claims for Medicaid reimbursement.
NID pleaded guilty on Wednesday before Judge Sterling Johnson Jr. in Brooklyn to a felony misbranding charge related to its Advantage Chemiluminescence Intact Parathyroid Hormone Immunoassay, an in vitro test used to measure thyroid hormone levels.
The test was sold to laboratories throughout the United States until 2006. NID had been aware since May 2000 that it provided elevated results, according to the Justice Department.
The use of the inaccurate tests allegedly caused laboratories and medical providers to submit false claims for reimbursement to federal health programs for unnecessary treatments.
NID admitted that it touted the test kit as having “excellent correlation” to the Immunoradiometric assay or IRMA, when NID knew that the two tests did not provide consistent and equivalent results.
The government began investigating after Thomas Cantor blew the whistle on NID. As a result, Cantor will receive about $45 million as part of the civil settlement.
Quest and NID agreed to pay $262 million plus interest to resolve allegations related to the thyroid assay and four other assays made by NID that provided inaccurate results.
NID has agreed to pay a criminal fine of $40 million. Quest has also entered into a non- prosecution agreement.
Quest has agreed to pay Medicaid programs approximately $6.2 million. The company has also entered into a Corporate Integrity Agreement.