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Four California Laboratories File Suit Against BC/BS, AETNA, and Quest

Copy of the formal complaint
Chris Riedel, chief executive officer of Hunter Laboratories, LLC, Campbell, California, announced at the November 14, 2012, meeting of the National Independent Laboratory Association (NILA), that a lawsuit has been filed by four California laboratories against Blue Shield of California Life & Health Insurance Company, Blue Cross and Blue Shield Association, AETNA, Inc., Quest Diagnostics, and Quest Diagnostics Clinical Laboratories, Inc., alleging that actions by the insurance giant and Quest have resulted in an unreasonable restraint on competition in violation of federal and California law, and constitute unlawful, unfair, and/or fraudulent business practices under California law.

The lawsuit alleges that:

  • In a threat to competition, Blue Shield of California and AETNA conspired with Quest Diagnostics to monopolize and otherwise restrain competition in the sale of routine, molecular, and specialty testing services in California.
  • Quest has worked in concert with Blue Cross and Blue Shield Association and member Blue Plans to promote a change in the national Blue Card policy that will eliminate from the market hundreds of molecular and specialty labs.
  • Blue Card Association has conspired with Quest to promote an exclusionary licensing agreement that requires labs to submit Blue Card members’ claims to the Blue Plan provider in whose region the patient is insured. The Blue Plans must be billed by the lab which performs the test; if the patient is not insured in the region where the lab services are performed, then the Plan in the patient’s region will not adjudicate the claim. Implementation of this new policy harms competition by molecular, anatomic pathology and other specialty labs to the benefit of Quest, as physicians are likely to steer business to Quest and away from what would now be more expensive out-of-network providers under the Blue Plans.
  • AETNA and Blue Shield of California have been successfully persuaded by Quest to terminate the in-network status of Quest’s smaller competitors in exchange for Quest offering financial and other incentives. These practices have effectively foreclosed substantial distribution opportunities to large portions of the market. These terminations effectively price labs out of the market, since physicians are likely to steer testing away from independent labs to save patients out-of-network fees.
  • AETNA conspired with Quest to eliminate competition within California from independent regional labs.

Plaintiffs include NILA member Hunter Laboratories, LLC; NILA member Rheumatology Diagnostics Laboratory, Inc.; Pacific Breast Pathology Medical Corporation; and Surgical Pathology Associates.

NILA members met in Washington, DC, November 14-15, 2012, in conjunction with NILA’s March on Washington. NILA representatives met with nearly 60 members of Congress to voice their concerns about cuts to the Part B Clinical Laboratory Fee Schedule (CLFS).

The National Independent Laboratory Association (NILA) is a trade association for clinical laboratories that provides a forum for the sharing of technical and business expertise. NILA focuses on business/management issues facing laboratories, such as marketing/sales, contracting with managed care companies, finding and keeping good employees, financial management, expanding test menus, managing growth, competing with big, publicly traded laboratories, and acting on legislative and regulatory issues facing the laboratory industry.