Corning in Talks to Settle Nichols Case

Corning Inc. of New York is negotiating with the federal government to settle charges that its Southern California medical research center improperly billed Medicare and other government-sponsored health plans for laboratory services, a Corning spokeswoman said Thursday.

Corning officials declined to elaborate on charges involving its San Juan Capistrano-based center, Nichols Institute. Another Corning unit, however, Damon Clinical Laboratories Inc. in Massachusetts, has agreed to pay $119 million to the federal government in a similar case involving billing doctors for blood tests that weren’t ordered.

Company spokeswoman Kathryn C. Littleton would only say Nichols is expected to pay less.

The Nichols Institute, which employs 1,400 people, was the headquarters of an independent company by the same name until Corning acquired it two years ago. Nichols, which also used to include regional lab sites, reported a loss of $4.4 million on revenue of $279.6 million in 1993.

Corning, which bought Nichols in a $325-million transaction, wouldn’t disclose the unit’s present sales level.

Littleton said Nichols had received government subpoenas for information regarding alleged billing improprieties before the Corning acquisition.

The Damon settlement, combined with two earlier, makes a total of $157 million the Corning, N.Y.-based corporation has agreed to pay thus far after a government probe several years ago into marketing, testing and billing practices across the lab-services industry.

Corning is now pursuing plans to spin off its clinical laboratories business, including Nichols, to form a new company.