Quest Diagnostics 2013 Annual Report Download - page 24

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dispose of regulated medical waste, hazardous waste and radioactive materials and contractually require them to comply with
applicable laws and regulations.
Physicians. Many of our pathologists enter into an employment agreement. These agreements have varying terms, but
generally can be terminated at any time, upon advance notice. Most of the agreements contain covenants generally limiting the
activities of the pathologist within a defined geographic area for a limited period of time after termination of employment. The
agreements may be subject to limitations under state law that may limit the enforceability of these covenants.
Our pathologists are required to hold a valid license to practice medicine in the jurisdiction in which they practice. If
they provide inpatient services, they must become a member of the medical staff at the relevant hospital, with privileges in
pathology.
Several states, including some in which our businesses are located, prohibit business corporations from engaging in
the practice of medicine. In certain states, business corporations are prohibited from employing licensed healthcare
professionals to provide services on behalf of the corporation; these laws vary from state to state. The manner in which licensed
physicians can be organized to perform medical services may be governed by the laws of the state in which medical services
are provided and by the medical boards or other entities authorized by these states to oversee the practice of medicine. In some
states, anatomic pathology services are delivered through physician-owned entities that employ the practicing pathologists.
Privacy and Security of Health and Personal Information. We are required to comply with laws and regulations in
the United States (at the federal and state levels) and jurisdictions outside the United States in which we conduct business,
including the European Union, India and Mexico, regarding protecting the security and privacy of certain healthcare and
personal information. These privacy and security laws include the federal Health Insurance Portability and Accountability Act,
as amended, and the regulations thereunder (collectively, “HIPAA”). The HIPAA security regulations establish requirements for
safeguarding protected health information. The HIPAA privacy regulations establish comprehensive federal standards regarding
the uses and disclosures of protected health information. Together, these laws and regulations establish a complex regulatory
framework on a variety of subjects, provide for penalties for non-compliance, and may require a healthcare provider to notify
individuals or the government if the provider discovers certain breaches of personal information or protected health
information. We maintain policies and practices designed to meet applicable requirements.
Drug Testing; Controlled Substances. All U.S. laboratories that perform drug testing for certain public sector
employees and employees of certain federally regulated businesses are required to be certified as meeting the detailed
performance and quality standards of the Substance Abuse and Mental Health Services Administration. To obtain access to
controlled substances used to perform drugs-of-abuse testing in the United States, laboratories must be licensed by the Drug
Enforcement Administration. All of our laboratories that perform such testing or that utilize controlled substances are so
certified or so licensed, respectively.
Compliance. We seek to conduct our business in compliance with all applicable laws and regulations. Many of the
laws and regulations applicable to us, however, including many of those relating to billing, reimbursement of tests and
relationships with physicians and hospitals, are vague or indefinite or have not been interpreted by the courts. They may be
interpreted or applied by a prosecutorial, regulatory or judicial authority in a manner that could require us to make changes in
our operations, including our pricing and/or billing practices. The applicability or interpretation of laws and regulations also
may not be clear in light of emerging changes in clinical testing science and healthcare technology. Such occurrences,
regardless of their outcome, could, among other things:
• increase our operating costs including but not limited to those costs associated with providing diagnostic
information services or manufacturing or distributing products, and administrative requirements related to billing;
• decrease the amount of reimbursement related to diagnostic information services performed;
• damage our reputation; and/or
• adversely affect important business relationships with third parties.
If we fail to comply with applicable laws and regulations, we could suffer civil and criminal penalties, fines, exclusion
from participation in governmental healthcare programs and the loss of various licenses, certificates and authorizations
necessary to operate our business, as well as incur additional liabilities from third-party claims, all of which could have a
material adverse effect on our business. Certain federal and state statutes, regulations and other laws, including the qui tam
provisions of federal and state false claims acts, allow private individuals to bring lawsuits against healthcare companies on
behalf of government payers, private payers and/or patients alleging inappropriate billing practices.