Quest Diagnostics Settles Unlawful PHI Disposal Allegations For $5M

February 21, 2024 - Quest Diagnostics reached a $5 million settlement to resolve allegations that the company illegally disposed of hazardous waste, medical waste, and protected health information (PHI) at its California facilities, California Attorney General Rob Bonta announced.

In addition to the $5 million, Quest will be required to make significant changes to its operations.

The settlement came about after several California district attorneys’ offices conducted 30 inspections at Quest Diagnostics laboratories and Patient Services Centers across the state. These investigations, which involved reviewing the contents of Quest’s compactors and dumpsters, revealed unredacted medical information and hundreds of containers of chemicals, along with bleach, batteries, and electronic waste.

The investigators also found used specimen containers for blood and urine, as well as used batteries, solvents, and flammable liquids. These improper disposals violated the Hazardous Waste Control Law, Medical Waste Management Act, Unfair Competition Law, and laws that prohibit the unauthorized disclosure of PHI.  

“Quest Diagnostics’ illegal disposal of hazardous and medical waste and patient information put families and communities at risk and endangered our environment,” Bonta stated. 

“Let today’s settlement send a clear message that my office will hold corporations, including medical services providers, accountable for violations of state environmental and privacy laws. I appreciate the partnership of the district attorneys’ offices across our state that led to this critical settlement.” 

Following notification of the investigation results, Quest hired an independent environmental auditor to review its waste disposal procedures and modify its policies to improve the handling and disposal of waste and PHI across its California labs.

Quest will pay $3,999,500 in civil penalties, $700,000 in costs, and $300,000 for a Supplemental Environmental Project “to support environmental training and enforcement in California,” Bonta’s office stated.

The settlement will also require Quest to report annually on its progress and maintain an environmental compliance program.

“We will not allow the public’s health to be jeopardized by laboratories who prioritized cutting corners over protecting the health of the very people they were supposed to be caring for,” said Orange County District Attorney Todd Spitzer.

“This was not an isolated incident by a single Quest Diagnostics testing facility; this was Quest Diagnostics laboratories and testing facilities across the state skirting California’s hazardous waste laws while ignoring the very real environmental and health impacts of these illegal actions.”

Other district attorneys involved in the investigations pointed out the implications that this settlement has on patient privacy.

“With judgments like these, we can ensure proper disposal of medical and hazardous waste which protects the public and the environment, while safeguarding the privacy of San Bernardino County residents,” said San Bernardino County District Attorney Jason Anderson.

While safeguarding and properly disposing of electronic PHI is crucial due to the prevalence of cyberattacks, protecting physical PHI throughout its lifecycle is just as important under HIPAA. Improper disposal of physical or electronic PHI can result in HIPAA violations and hefty fines.

The HIPAA Privacy Rule “requires that covered entities apply appropriate administrative, technical, and physical safeguards to protect the privacy of protected health information (PHI), in any form,” HHS states in its FAQ about PHI disposal.

“This means that covered entities must implement reasonable safeguards to limit incidental, and avoid prohibited, uses and disclosures of PHI, including in connection with the disposal of such information.”

As exemplified by the Quest Diagnostics settlement, proper disposal of PHI by covered entities and business associates is a key part of any HIPAA compliance program.