The government’s investigation was prompted by the filing of a qui tam, or whistleblower, lawsuit by Thomas Cantor in the U.S. District Court for the Eastern District of New York in 2004.

Cantor, a biochemist, alleged that Quest and NID had defrauded the government by causing health care providers to bill Medicare and other federal health care programs for faulty medical tests, as well as for unnecessary drugs and surgeries that followed inaccurate diagnoses caused by bad test results.

Cantor’s lawsuit was kept under seal until April 15, when a federal judge approved the settlement, according to a press release from Phillips & Cohen LLP, Washington, D.C., which represented Cantor in the action. Cantor will share in the recovery and will receive about $45 million, the DOJ said.

According to the Phillips & Cohen release, Cantor’s primary reason for bringing the qui tam suit was to bring about the government investigation. “I felt very frustrated when I tried to stop the use of faulty tests on my own,” he said.

After he presented to government investigators his evidence about the faulty tests and his concerns about the danger to dialysis patients, Cantor said a Federal Bureau of Investigation agent promised him that it would make NID stop. The government issued subpoenas to NID in October 2004, seeking documents related to the test kits.

The tests targeted by Cantor and the government were used to determine the concentration of a parathyroid hormone, which, in turn, is used to determine how to treat dialysis patients, so accurate results are essential, the Phillips & Cohen release said. The inaccurate test results put the health of hundreds of thousands of dialysis patients at risk, it said.

“Dialysis patients and their doctors relied on the PTH test kits to determine treatment for these vulnerable patients,” Erika A. Kelton, the Phillips & Cohen attorney who represented Cantor, said. “The health consequences of inaccurate measurements of PTH in a dialysis patient can be serious, irreversible, and cause tremendous pain.”

Michael F. Hertz, acting assistant attorney general for DOJ’s Civil Division, said: “Pursuing the case was particularly important in light of the potential for adverse health consequences to beneficiaries of federal health care programs.”

U.S. Attorney for the Eastern District of New York Benton J. Campbell agreed, saying: “The American public has the right to expect medical device manufacturers to make accurate claims in their labeling, especially when the failure to meet those claims could indicate that the performance of the device is suspect.”

“In order to safeguard public health, and when appropriate, to recover taxpayer dollars, the government will vigorously investigate allegations that a manufacturer knowingly sold medical devices, such as test kits, that were materially unreliable or provided significantly inaccurate results,” Campbell said.

The civil lawsuit alleged that NID made, marketed, and sold the Advantage Intact PTH kit and another kit, the Bio-Intact PTH test kit, despite knowing that some kits produced materially inaccurate and unreliable results, according to the DOJ.

NID’s conduct resulted in the submission by clinical laboratories of false claims for reimbursement to federal health care programs and in the submission by medical providers of false claims for reimbursement for unnecessary treatments and procedures, it said.

The criminal charges, by contrast, focused solely on the Advantage Intact PTH kit. The information filed against NID alleged that the test often produced elevated results, but the marketing materials that NID distributed described the product as having “excellent correlation” to a proven assay, the DOJ said.

Additionally, the directional insert for the kit, in a section titled “Accuracy,” described a study in which the Advantage Intact PTH Assay produced results nearly identical to those produced by the proven assay when used to test PTH levels in samples of human blood. Contrary to those claims, however, NID knew as early as May 2000 that its kit was not consistently providing such results, the DOJ said.

As part of the guilty plea, NID admitted that in or about May 2000 and at various times thereafter, the company knowingly, intentionally, and with intent to mislead introduced into interstate commerce the Advantage Intact PTH Assay, which was misbranded, the DOJ release said.