State Sues Labs, Seeking $3 Million, Free Pap Tests

State health officials filed suit late Thursday against operators of a Tarzana medical laboratory business, seeking more than $3 million in damages and a court order requiring the firms to offer free re-analysis of millions of Pap smears they diagnosed during the past five years.

The suit filed in Los Angeles Superior Court names six defendants, including Central Diagnostic laboratory and Central Pathology Services Medical Group, the state’s largest Pap smear lab until its closure last month after state inspectors found that it had misdiagnosed 21% of a randomly selected group of 1,103 smears.

A lawyer for the state said the nine-page complaint, filed on behalf of state Health Services Director Kenneth Kizer, is an attempt to enforce the state’s demand last month that the companies notify all clients in the past five years of their willingness to pay for re-analysis of Pap smears, used to detect cervical cancer and other medical abnormalities in women.

The Department of Health Services made the demand April 17, giving the labs 30 days to comply, and filed suit the day after the deadline.

$1-Million Bond

The suit also asks that the defendants be required to provide a $1-million bond to ensure payment for re-analyses by licensed labs “unaffiliated with the defendants.”

Before closing in April at the state’s request, Central Pathology processed nearly 700,000 Pap smears a year, more than half of those taken in Southern California. Earlier in the year, the U.S. Department of Health and Human Services took Central Pathology off its list of approved Medicare and Medi-Cal vendors because of a purportedly high error rate in reading Pap smears.

A spokesman for the defendants, Martin Cooper, said Thursday night he could not respond in detail because he had not read the suit.

But, Cooper said, the state had “unnecessarily filed a lawsuit, spending taxpayers’ money, in an attempt to accomplish that which we are already willing to do.”

Cooper said several drafts of notification letters to doctors have been exchanged between the laboratories and the state. He said the companies also told the state they will surrender their license to operate a cytology lab, another of the state’s demands.

“Given the progress we thought we were making . . . we are surprised that the state would act in such a peremptory manner,” Cooper said.

Deputy Atty. Gen. Wendi A. Horwitz, who filed the suit, acknowledged that discussions were under way, but said state officials “thought they were dragging their feet. . . . We thought, ‘Hey, we’ll bring a lawsuit and get their attention.’ ” Horwitz said she was uncertain when the request for a court order would be heard.

Other Defendants

In addition to Central Pathology and Central Diagnostic, the suit names Amsterdam International Laboratories, a third firm located in the 18400 block of Oxnard Street in Tarzana. Amsterdam owns Central Diagnostic.

A fourth defendant is Dr. Allen N. Levy, a pathologist and owner of Amsterdam and Central Pathology. The remaining defendants are Harry Sagheb, described as an officer of all three firms, and Richard M. Brooks, described as vice president of Central Diagnostic.

The suit seeks a civil penalty of $500,000 against each of the six defendants.

It also requests a $2,500 penalty for each of 22 alleged violations of the state Business and Professions Code, cited in a state survey of Central Pathology completed March 28.

Among the purported deficiencies was a high rate of misdiagnosis of Pap smears, with 234 of 1,103 smears reported inaccurately or on the basis of inadequately prepared slides.

The state also accused Central Pathology of requiring technicians to read too many slides to ensure accurate results.