May 9, 2011 / 9:30 PM / in 7 years

UPDATE 1-Quest Diagnostics to pay $241 mln to settle lawsuit

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May 9 (Reuters) - Quest Diagnostics Inc said it would pay $241 million to settle a civil lawsuit that alleged that the company had failed to comply with regulations, leading to overbilling for its services.

According to the lawsuit, Medi-Cal -- California’s Medicaid program -- had overpaid for the company’s laboratory testing services.

Quest recorded a related pre-tax charge of $236 million, or $1.19 a share, in the first quarter, the company said in a statement.

The charge reduces its previously reported income from continuing operations for the first quarter by $195 million, or $1.19 per share, to a loss of $53 million, or 33 cents a share, the company said.

The lawsuit was filed in the California Superior Court by smaller rival Hunter Laboratories and the State of California had intervened as a plaintiff.

Quest has agreed to reporting obligations regarding its pricing for a limited period and will provide Medi-Cal with a discount until the end of July 2012.

The company will be released from all claims in the lawsuit.

Quest Diagnostics’ shares closed at $56.78 on Friday on the New York Stock Exchange. (Reporting by Shravya Jain in Bangalore; Editing by Saumyadeb Chakrabarty)

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