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)