Quest Diagnostics 2009 Annual Report Download - page 39

adequately implement it, our business could be adversely impacted. In addition, if as a result of the new coding
set physicians fail to provide appropriate codes for desired tests, we may not be reimbursed for such tests.
Adverse results in material litigation could have an adverse financial impact and an adverse impact on our
client base and reputation.
We are involved in various legal proceedings arising in the ordinary course of business including, among
other things, disputes as to intellectual property, professional liability and employee-related matters, as well as
inquiries from governmental agencies and Medicare or Medicaid carriers regarding billing issues. Some of the
proceedings against us involve claims that are substantial in amount and could divert management’s attention
from operations. The proceedings also may result in substantial monetary damages, as well as damage to our
reputation, and decrease the demand for our services and products, all of which could have a material adverse
effect on our business. We do not have insurance or are substantially self-insured for a significant portion of any
liability with respect to such claims. The ultimate outcome of the various proceedings or claims could have a
material adverse effect on our financial condition, results of operations or cash flows in the period in which the
impact of such matters is determined or paid.
If we fail to comply with the requirements of our Corporate Integrity Agreement, we could be subject to
suspension or termination from participation in federal healthcare programs and substantial monetary
penalties.
As part of a settlement with the U.S. Department of Justice and other federal government agencies, in April
2009 we entered into a five-year Corporate Integrity Agreement with the U.S. Department of Health and Human
Services Office of Inspector General. If we fail to comply with our obligations under the Corporate Integrity
Agreement, we could be suspended or terminated from participating in certain federal healthcare programs and
subject to substantial monetary penalties.
CAUTIONARY FACTORS THAT MAY AFFECT FUTURE RESULTS
Some statements and disclosures in this document are forward-looking statements. Forward-looking
statements include all statements that do not relate solely to historical or current facts and can be identified by
the use of words such as “may”, “believe”, “will”, “expect”, “project”, “estimate”, “anticipate”, “plan” or
“continue.” These forward-looking statements are based on our current plans and expectations and are subject to
a number of risks and uncertainties that could cause our plans and expectations, including actual results, to differ
materially from the forward-looking statements. Investors are cautioned not to unduly rely on such forward-
looking statements when evaluating the information presented in this document. The following important factors
could cause our actual financial results to differ materially from those projected, forecasted or estimated by us in
forward-looking statements:
(a) Heightened competition from commercial clinical testing companies, and from hospitals with respect to
testing for non-patients and from physicians.
(b) Increased pricing pressure from customers and payers.
(c) A continued weakness in economic conditions.
(d) Impact of changes in payer mix, including any shift from fee-for-service to discounted or capitated fee
arrangements.
(e) Adverse actions by government or other third-party payers, including healthcare reform that focuses on
reducing healthcare costs but does not recognize the value and importance to healthcare of diagnostic
testing, unilateral reduction of fee schedules payable to us, competitive bidding, and an increase in the
practice of negotiating for exclusive arrangements that involve aggressively priced capitated or fee-for-
service payments by health insurers or other payers.
(f) The impact upon our testing volume and collected revenue or general or administrative expenses
resulting from our compliance with Medicare and Medicaid administrative policies and requirements of
third party payers. These include:
(1) the requirements of Medicare carriers to provide diagnosis codes for many commonly ordered tests
(and the transition to a new coding set) and the possibility that third party payers will increasingly
adopt similar requirements;
(2) continued inconsistent practices among the different local carriers administering Medicare;
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