Quest Diagnostics pays more than $13 million to settle allegations of illegal kickbacks involving Giants tickets, VIP events

NEW JERSEY — Secaucus-based Quest Diagnostics Inc. has paid more than $13 million to settle federal allegations that it provided doctors and health care executives with free tickets to New York Giants games and other exclusive entertainment events in exchange for patient referrals, according to the U.S. Attorney’s Office for the District of New Jersey.

The company paid $13,014,576 plus interest to resolve allegations that it violated the federal Anti-Kickback Statute and submitted false claims to Medicare and the New York and New Jersey Medicaid programs, U.S. Attorney Robert Frazer announced.

Federal authorities alleged that between July 25, 2013, and Aug. 3, 2022, Quest offered valuable entertainment experiences to health care providers and other decision-makers to encourage them to refer patients for laboratory testing. The company then allegedly submitted or caused the submission of claims for those services to federally funded health care programs.

“This agreement is yet another example of our office’s commitment to enforcing the False Claims Act and the Anti-Kickback Statute to protect taxpayer dollars and the Medicare and Medicaid programs from fraud, waste, and abuse. Kickbacks to referring providers, especially by lab companies, corrupt medical judgment, lead to unnecessary lab testing, cause providers to steer patients to labs that offer inducements, and squander taxpayer money,” U.S. Attorney Robert Frazer said.

According to federal prosecutors, Quest entered into a naming rights and sponsorship agreement with the New York Giants in 2013 that provided the company with access to luxury suites at MetLife Stadium for home games, along with marketing, hospitality and other commercial benefits.

Investigators alleged that Quest used those benefits to provide free entertainment to individuals from current and prospective client accounts who had the authority to direct or influence laboratory testing referrals.

The entertainment included suite seats at Giants home games, where guests received food, alcoholic beverages and, in some instances, parking or access to the field to watch pregame warmups.

Other events included VIP training camp experiences that allowed invited guests to watch Giants practices from dedicated viewing areas near the field, interact with players, obtain autographs and receive meals.

Quest also allegedly hosted NFL-style draft presentations known as “Draft Chalk Talks,” featuring former Giants players who discussed draft strategies, predictions and their own experiences. Those events included interactive mock drafts, dinner, opportunities to meet former players and behind-the-scenes tours of the team’s training center.

Federal authorities said the company also provided “Family Combine Days,” during which clients and their family members could participate in football drills led by Giants players, take photographs, obtain autographs and tour the training facility.

Prosecutors allege entertainment was tied to business referrals

According to the settlement allegations, Quest specifically targeted decision-makers at its highest-value client accounts to maximize the financial return from providing the entertainment experiences.

Federal prosecutors alleged that company executives and sales representatives identified individuals who could influence where patients received laboratory testing services. Sales representatives were required to attend the Giants events with their invited clients and allegedly connected the invitations to specific sales goals that were shared with senior management.

From the 2013 through 2016 football seasons, Quest also tracked the financial return from the entertainment events, according to authorities. The company allegedly compared revenue generated by client accounts before the events with revenue received for up to one year afterward to determine whether the entertainment resulted in additional business.

Investigators alleged that Quest subsequently billed Medicare and the New York and New Jersey Medicaid programs for laboratory testing referred by client accounts whose representatives had received the free entertainment.

The federal Anti-Kickback Statute prohibits offering, paying, soliciting or receiving anything of value to induce referrals for services covered by Medicare, Medicaid and other federally funded health care programs. The law is intended to ensure that medical decisions are based on patient needs rather than improper financial incentives.

Five-year corporate integrity agreement

As part of the resolution, Quest also entered into a five-year Corporate Integrity Agreement with the U.S. Department of Health and Human Services Office of Inspector General.

The agreement requires an independent review organization to evaluate Quest’s risk assessments and audits involving payments, benefits and other forms of compensation provided to referral sources.

“Violations of the Anti-Kickback Statute compromise medical judgment and threaten the integrity of federal health care programs,” said Naomi D. Gruchacz, Special Agent in Charge of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG). “HHS-OIG is committed to ensuring that health care decisions are based on patient needs – not improper financial incentives – and will continue working with our law enforcement partners to protect these programs.”

The FBI also participated in the investigation, with officials emphasizing the importance of preventing improper financial arrangements that could influence health care decisions and increase costs to government programs.

“The FBI is committed to rooting out health care fraud in NJ and beyond. It is essential that Americans can trust in the health care system and that anyone exploiting it by making false claims and utilizing kickbacks, is held accountable. This $13 million dollar settlement is a valuable representation of this commitment,” said Newark FBI SAC Stefanie Roddy.

Whistleblowers to receive nearly $2.5 million

The allegations originated in a lawsuit filed under the whistleblower provisions of the federal False Claims Act, which allows private individuals to bring lawsuits on behalf of the United States alleging fraud against government programs.

Under the law, whistleblowers, also known as relators, may receive a portion of the money recovered by the government when a case results in a settlement or judgment.

In this case, the three whistleblowers — Dr. Gerard Abate, Lori Anderson and Dr. Douglas S. Rabin — will receive a combined $2,472,769 as their share of the settlement.

Federal officials emphasized that the claims resolved through the settlement are allegations only and that there has been no determination of liability.