To: Board of Supervisors
From: Dr. Ori Tzvieli, Interim Health Services Director
Report Title: Payment for Services Provided by Specialty Laboratories, Inc. (DBA Quest Diagnostics Nichols Institute of Valencia)
☒Recommendation of the County Administrator ☐ Recommendation of Board Committee
RECOMMENDATIONS:
APPROVE and AUTHORIZE the Auditor-Controller, or designee, to pay $201,232.33 to Specialty Laboratories, Inc. (dba Quest Diagnostics Nichols Institute of Valencia), for the provision of outside clinical laboratory services provided to County patients for the period May 1, 2024 through December 31, 2024, as recommended by the Interim Health Services Director.
FISCAL IMPACT:
Approval of this payment will result in a one-time expenditure of up to $201,232.33 and will be funded 100% by Hospital Enterprise Fund I revenues.
BACKGROUND:
Contra Costa Regional Medical Center (CCRMC) and Contra Costa Health Centers have an obligation to provide laboratory testing services to patients. On occasion, County contracts with outside laboratory testing services in order to provide testing that requires special equipment not available at county facilities. Contractor has been providing outside clinical laboratory testing services for CCRMC since January 2007.
This Contract is entered into under and subject to the following legal authorities: California Government Code Section 26227 and 31000; Health and Safety Code § 1451. This Contract was approved by Health Services Personnel to ensure there is no conflict with labor relations. CCRMC’s Quality Management, Utilization Management and Contract Monitor Staff meet on a regular basis to ensure monitoring and performance measures in the Contract are upheld. Contractor is a member of the Vizient Group Purchasing Organization (GPO) and per Administrative Bulletin 600.3, GPO members are exempt from solicitation requirements.
On February 28, 2023, the Board of Supervisors approved Contract #26-583-33 with Specialty Laboratories, Inc. (dba Quest Diagnostic Nichols Institute), in an amount not to exceed $5,000,000, for the provision of outside clinical laboratory services for CCRMC and Contra Costa Health Centers, for the period January 1, 2023 through December 31, 2024.
On July 11, 2023, the Board of Supervisors approved Contract Amendment Agreement #26-583-35, effective July 1, 2023, to provide additional outside clinical laboratory services, with no change in the payment limit of $5,000,000 or term January 1, 2023 through December 31, 2024.
There were specialized clinical laboratory tests that were not included in the rate schedule for Contract #26-583-33 (as amended by Contract Amendment #26-583-34). The discovery was made after the invoices were returned from County’s Finance department. Contractor provided these services in good faith for the period May 1, 2024 through December 31, 2024, which exceeded the original payment limit by $201,232.33.
Therefore, the County has determined that Specialty Laboratories, Inc. (dba Quest Diagnostics Nichols Institute of Valencia) is entitled to payment for the reasonable value of their services under the equitable relief theory of quantum meruit. That theory provides that where a person has been asked to provide services without a valid contract, and the provider does so to the benefit of the recipient, the provider is entitled to recover the reasonable value of those services. As such, the Department recommends that the Board authorize the Auditor-Controller to issue a one-time payment not to exceed $201,232.33 to Specialty Laboratories, Inc. (dba Quest Diagnostics Nichols Institute of Valencia).
CONSEQUENCE OF NEGATIVE ACTION:
If this payment is not approved, the Contractor will not be paid for services requested by County staff and provided by Contractor provided in good faith.