Quest Diagnostics 2012 Annual Report Download - page 34

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In November 2011, the Senate Finance Committee and the Senate Judiciary Committee commenced an inquiry into
certain alleged practices in the laboratory testing and managed care businesses.
In November 2011, we received a letter from Senator Charles E. Grassley, ranking member of the U.S. Senate
Committee on the Judiciary and Senator Max Baucus, Chairman of the U.S. Senate Committee on Finance, requesting
information regarding certain alleged practices in the laboratory testing and managed care businesses. A similar letter was sent
to other companies that sponsor managed care organizations or which are engaged in the laboratory testing business. The
Company has cooperated with the request. The Company is unable to predict the timing or outcome of this inquiry, or its
impact on our business. Similar inquiries may be made by other governmental authorities regarding this or other topics. We
may experience negative publicity with respect to these matters.
Such inquiries may result in a finding of failure to comply with laws or regulations, changes in laws or regulations, the
commencement of civil or criminal proceedings, substantial fines, penalties or administrative remedies, including the loss of
the right to participate in the Medicare and Medicaid programs, or the imposition of additional and costly compliance
obligations. If the inquiries continue over a long period of time, they could divert the attention of management from the day-to-
day operations of our business and impose significant administrative burdens on our Company.
These matters could have a material adverse effect on our business and our consolidated financial condition, results of
operations and cash flows.
Our operations may be adversely impacted by the effect of trends in utilization of the U.S. healthcare system.
Our operations may be adversely impacted by the effects of trends in the utilization of the healthcare system in the
United States. Trends in the utilization of the U.S. healthcare system can be influenced by such factors as unemployment,
under-employed workers and decisions to delay medical care. Declining utilization of the U.S. healthcare system may result in
a decline in the number of patients who seek clinical testing services. These matters could have a material adverse effect on our
business and our consolidated financial condition, results of operations and cash flows.
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, hospitals and physicians.
(b) Increased pricing pressure from customers and payers.
(c) A decline or 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.