Quest Diagnostics 2015 Annual Report Download - page 116

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED
(in millions unless otherwise indicated)
F- 41
plaintiff as to Berkeley HeartLab, Inc., a subsidiary of the Company and filed a complaint in intervention; the United States did
not intervene as a plaintiff as to Quest Diagnostics Incorporated.
The federal or state governments may bring claims based on the Company's current practices, which it believes are
lawful. In addition, certain federal and state statutes, including the qui tam provisions of the federal False Claims Act, allow
private individuals to bring lawsuits against healthcare companies on behalf of government or private payers. The Company is
aware of lawsuits, and from time to time has received subpoenas, related to billing practices based on the qui tam provisions of
the Civil False Claims Act or other federal and state statutes, regulations or other laws. The Company understands that there
may be other pending qui tam claims brought by former employees or other "whistle blowers" as to which the Company cannot
determine the extent of any potential liability.
Management cannot predict the outcome of such matters. Although management does not anticipate that the ultimate
outcome of such matters will have a material adverse effect on the Company's financial condition, given the high degree of
judgment involved in establishing loss estimates related to these types of matters, the outcome of such matters may be material
to the Company's results of operations or cash flows in the period in which the impact of such matters is determined or paid.
These matters are in different stages. Some of these matters are in their early stages. Matters may involve responding
to and cooperating with various government investigations and related subpoenas. As of December 31, 2015, the Company
does not believe that any material losses related to the legal matters described above are probable. While the Company
believes that a reasonable possibility exists that losses may have been incurred related to the legal matters described above for
which an accrual has not been recorded, based on the nature and status of these matters, potential losses, if any, cannot be
estimated.
Reserves for Legal Matters
Reserves for legal matters, other than those described above, totaled $9 million and $11 million at December 31, 2015
and 2014, respectively.
Reserves for General and Professional Liability Claims
As a general matter, providers of clinical testing services may be subject to lawsuits alleging negligence or other
similar legal claims. These suits could involve claims for substantial damages. Any professional liability litigation could also
have an adverse impact on the Company's client base and reputation. The Company maintains various liability insurance
coverages for, among other things, claims that could result from providing, or failing to provide, clinical testing services,
including inaccurate testing results, and other exposures. The Company's insurance coverage limits its maximum exposure on
individual claims; however, the Company is essentially self-insured for a significant portion of these claims. Reserves for such
matters, including those associated with both asserted and incurred but not reported claims, are established by considering
actuarially determined losses based upon the Company's historical and projected loss experience. Such reserves totaled $124
million and $113 million as of December 31, 2015 and 2014, respectively. Management believes that established reserves and
present insurance coverage are sufficient to cover currently estimated exposures. Management cannot predict the outcome of
any claims made against the Company. Although management does not anticipate that the ultimate outcome of any such
proceedings or claims will have a material adverse effect on the Company's financial condition, given the high degree of
judgment involved in establishing accruals for loss estimates related to these types of matters, the outcome may be material to
the Company's results of operations or cash flows in the period in which the impact of such claims is determined or paid.
18. DISCONTINUED OPERATIONS
During the fourth quarter of 2012, the Company committed to a plan to sell HemoCue. The Company sold HemoCue
in April 2013 for $296 million (net of cash divested and transaction costs).
During the third quarter of 2006, the Company completed its wind down of NID and classified the operations of NID
as discontinued operations. The Company will continue to report NID as a discontinued operation until uncertain tax benefits
associated with NID are resolved.
The results of operations for NID and HemoCue have been classified as discontinued operations for all periods
presented.
QUEST DIAGNOSTICS 2015 ANNUAL REPORT ON FORM 10-K