“March 2, 1998 Intelligence:  Late Breaking Lab News”

An interesting executive shuffle is under way at Quest Diagnostics Incorporated. James D. Chambers was promoted to Senior Vice President, Marketing and Business Development. He will report directly to CEO Ken Freeman. Chambers will assume many of the duties handled by Don Hardison, Jr., who is leaving Quest Diagnostics.

Chambers has a non-laboratory background. Before joining Quest Diagnostics in 1993, he was with Corning Incorporated. Hardison was formerly with SmithKline Beecham Clinical Laboratories (SBCL). He was recruited by Quest Diagnostics in early 1996, around the time that SmithKline reorganized certain of its healthcare services divisions.

Cigna Corp. and a Brazilian partner are investing $200 million in Gold Cross, a large healthcare company in Brazil. Gold Cross insures 1.5 million HMO members and other insurance customers. Cigna had earlier invested in another Sao Paulo-based HMO that serves 500,000 members. Look for more international investments by American insurance companies and health care providers.


Assistant U.S. Attorney Kathleen Haley told a federal judge in Fort Meyers, Florida that another indictment is coming in the government’s investigation into Columbia/HCA Healthcare Corp. She also stated that additional charges would be brought against Columbia managers Robert Whiteside, Michael Neeb and Jay Jarrell. All three executives are currently awaiting trial under earlier indictments. It was not disclosed who the additional defendant would be, nor what specific charges would be filed against that individual.

Even as the government continues its investigation of Columbia/HCA, the so- called “Lab Scam” probe of clinical laboratories continues. The latest round is criminal indictments filed against four former executives of Damon Clinical Laboratories, Inc. in Boston. Named in the January 22 indictment were Joseph Isola, formerly President; Beno Kon, formerly corporate controller; William Thurston, formerly Senior Vice President, Operations; and Gerald Cullen, formerly Senior Vice President, Operations. They are accused of conspiracy to defraud the MediCare program of more than $25 million.

Purchased by MetPath, Inc. (now Quest Diagnostics Incorporated) in 1994, Damon pled guilty to federal charges and paid $119 million in civil and criminal penalties in 1996. These new indictments by federal prosecutors indicate that “Lab Scam” is still an ongoing federal project. In fact, the original 1993 subpoena against Nichols Institute remains unsettled. MetPath purchased Nichols in 1994 and has a reserve of $70 million to cover potential penalties related to that subpoena.

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