First published in The Record, Oct. 20, 2022

The scandalous origin story of American diagnostics was a secret.

Until now.

The Technicon SMA 12/60 was the future of medicine. Anybody who saw the thing knew it was so. It could take a vial of blood, divide it into 60 parts, and test that blood for a dozen different conditions. Such work would take a human pathologist days. The Technicon delivered results in an hour. It even looked like the future. Standing navel-high, with dials and tubes in a long white cabinet, the Technicon resembled a bank of computers inside NASA’s mission control center, which at the time — spring 1969 — was preparing to send the first Apollo spacecraft to the moon.

Dr. Paul A. Brown recognized the future because he worked in the past. At age 29, Brown was a resident at New York-Columbia Presbyterian Hospital and founder of Metropolitan Pathology Laboratories, a big-time name for a small-time company. The lab operated in a first-floor apartment in upper Manhattan, where Brown used ethyl alcohol to stain Pap smear slides in the bathtub. It was slow, messy work, and it made the apartment smell like cheap wine.

Then Brown saw the Technicon. The big machine was located 6 miles from New York in a small hospital in Englewood, New Jersey. There, Brown’s mentor, Dr. Ray Gambino, ran a laboratory. Gambino was viewed as one of the smartest pathologists in the country. His stature, and his work as a consultant for Technicon, helped him land one of the world’s first automated test machines.

As the big machine hummed along, Brown gathered in the laboratory’s library with his fellow resident, Dr. James Powell, to marvel at its power.

“I guess that ‘a-ha’ moment would have been in early 1969,” Powell said. “The realization hit Paul and me about the same time, that this could be something totally new and different.”

In 1969, most pathologists worked either in hospitals or in labs they’d built themselves, often in their own garages. Results varied widely between labs, and sometimes between batches of the same test by the same lab. For complex tests, doctors in New York often mailed samples to specialized labs in California, then waited weeks for the result. Tests were expensive, unreliable and slow. No surprise, then, that doctors rarely relied on them to make a diagnosis.

When Brown saw the Technicon, he knew that was about to change.

“Paul Brown, he figured it out himself,” Ray Gambino said in an interview in 2021. “He didn’t need me to tell him.”

Automated testing wouldn’t merely replace thousands of pathologists performing tests by hand. It would reorder the power structure of American medicine, which for decades had vested nearly all power over patient diagnosis and treatment in the hands of doctors.

“I knew the lab is better than the doctor,” said Gambino, who died in January 2022, at age 95. “The doctor thinks he knows what’s going on. But the lab knows exactly what’s happening. It’s objective and reproduceable and reliable.”

Gambino also knew that whoever created the world’s first automated laboratory would become rich. Such a project would require an entrepreneur of indominable drive. Happily for Gambino, his roster of interns in 1969 happened to include two such young men. Separately but simultaneously, Brown and Powell created companies that would dominate the diagnostics industry, and place lab tests at the heart of American medicine.

“I trained the resident who founded Quest Diagnostics, and I also trained the founder of Labcorp,” Gambino said. “It was nice. They both did great jobs.”

Standing in the library of a small suburban hospital, Brown didn’t know that building some of the world’s largest laboratories would drive him to push the boundaries of medical ethics, and occasionally to break the law. He was clear-eyed about his tactics, however. In a memoir titled "Success in the Business Jungle," published in 1998, Brown described himself as “(a)ggressive, maybe even opportunistic.”

And he was blunt about his goal.

“Money is the best motivator for a brand-new business,” Brown wrote, “the only one an entrepreneur . . . should have.”

Lightning strikes twice

Silicon Valley was born in a rented Palo Alto garage in 1938, when Bill Hewlett and Dave Packard created a workshop for what became the electronics giant HP. Personal computers were born in a garage in 1976, when Steve Jobs and Steve Wozniak met to create the Apple I.

Modern medicine has a similar origin story, one that’s remained hidden.

Until now.

American health care as we experience it today was born in a little hospital laboratory in Englewood.

Powell took his knowledge of the Technicon SMA 12/60 home to Burlington, North Carolina. There he founded a company called Biomedical Laboratories that, through mergers and acquisitions, became the modern testing behemoth Labcorp. Brown’s tiny laboratory followed a similar trajectory to become MetPath and then Quest Diagnostics, Labcorp’s biggest rival. Long before COVID, Quest and Labcorp dominated diagnostic testing in the United States. In 2017 the two companies earned $14.5 billion in combined annual revenue, representing 54% of the national testing market.

That was five times bigger than their next four largest competitors combined.

The pandemic only enhanced the power of Quest and Labcorp. In 2020, Quest’s revenues jumped 22% to $9.44 billion, the largest year-over-year increase since the company’s days as a startup in the early 1970s. Together Quest and Labcorp reported $27 billion in revenue in 2021, an 86% increase over the last five years.

“Just look at Quest’s profits now compared to a year ago,” said Chris Riedel, a former laboratory executive who founded two testing companies. “COVID is the best thing to happen in the lab industry ever.”

As Quest and Labcorp grew in power, diagnostic tests grew in popularity to become the foundation of American health care. This change is invisible to most Americans. Diagnostic testing isn’t like an iPhone. It happens out of view, in some distant laboratory.

Think about it, though. When you see a new doctor, get a physical exam, experience a health problem that requires diagnosis, or prepare for surgery of any kind, often you are asked to give a sample of blood, urine, stool or tissue. That sample is sent to a laboratory for testing. If you need non-emergency surgery, the procedure can’t be scheduled until your doctor receives the test results.

In 1969, none of that was true. Today, labs perform 14 billion tests a year, accounting for 70% of all diagnoses in the United States, according to the Centers for Disease Control and Prevention.

The laboratory is where American medicine starts.

“I really helped found this area of laboratory medicine,” Gambino said. “The field didn’t exist as such until I got involved with it.”

Brown’s quest is a classic American tale. As a young man, he wanted to get wealthy by building the largest laboratory company in the world. He wanted to reform an industry plagued by decades of fraud.

Brown’s relentless drive had a dark side. Several times, it drove his company to the brink of bankruptcy. Occasionally, it caused Brown to break the law, including operating in New York without a license — something Brown later admitted to.

“Paul was not as ethical as Corning would like him to be,” Gambino said of the company that purchased MetPath in 1982.

Some of Quest’s competitors and critics say that Brown’s ethos of aggressive growth and loose ethics was baked into the DNA of the company he founded, where it remains today.

“The core of Quest’s business model is fraud,” said Riedel, who sued Quest Diagnostics for billing fraud in seven states.

Quest settled six of those cases, including an agreement in 2011 with Kamala Harris, then the attorney general of California, in which the company paid $241 million to resolve allegations of Medicaid fraud. The state investigation also focused on Labcorp, which paid $49.5 million to settle similar allegations of fraud. Both companies denied any wrongdoing.    

“Without this business model,” Riedel said, “they could never have grown to the size they are and put so many competitors out of business.”

Other industry executives say that while Quest’s leaders remain aggressive in their pursuit of growth, the company today is too large and too closely watched by federal and state regulators to even consider fraudulent tactics.

“I know a ton of insiders at Quest. It is a very well-run company,” said Melissa Butterworth, a former Labcorp executive who owns a company that helps to arrange deals in which Labcorp and Quest purchase smaller laboratories. “They have really good quality control.”

Quest Diagnostics did not respond to requests for comment for this story. In its 2020 annual report, the company wrote, “We strive to foster a strong culture, built on our Code of Ethics, which reinforces our commitment to integrity and aligns with our vision, values, goals and brand.”

What’s clear is that in many ways, the company that became Quest Diagnostics embodied the values of Silicon Valley before Silicon Valley existed. Brown understood that when building a startup, buzz is more essential than profit. Even if it comes with a trail of scandal.

Growth and crisis

The first time Paul Brown flooded his own laboratory, the source of water was at first a mystery. His company, renamed MetPath, had moved from a dank Manhattan apartment to a converted storefront in Teaneck, New Jersey. The space had 8,000 square feet, which Brown filled with the latest testing equipment and a staff of technicians.

“We were doing some of the most sophisticated tests in the country,” Brown wrote in his memoir.

Then water started to rise from the floor. Eventually Brown discovered his big machines spewed so many chemicals that acid waste had torn holes in the building’s drainpipes. 

“We lost some customers for good after the flood destroyed their samples,” Brown wrote.  

MetPath was doing things no company had tried. No laboratory ever had purchased so much automated equipment, signed contracts with so many doctors so quickly, nor promised those doctors they’d receive such speedy results — within 24 hours. Doctors liked the precision of the new machines. They appreciated the speed.

They loved Brown.

“Charming? No. I wouldn’t say Paul Brown was charming,” said Gambino. “He was a powerhouse. He was a ball of fire. When he came to my home once, my wife and I were overwhelmed by his insights and his energy.”

Brown started his lab in 1967 with a $500 loan from his father-in-law. He grew the business so quickly that within the first year, a group of venture capitalists offered $1.5 million to buy him out, according to his book. Instead, Brown sold shares and raised $240,000, enough to finance the move to Teaneck.

Thirty days later, MetPath was broke again. Sell more shares. Go public. Get a loan. Buy machines. Hire people. Get bigger. Go broke. Repeat. This is how young MetPath grew. One day in 1970, Brown later wrote, MetPath owed its employees $37,000 in paychecks by 5 p.m.

But the company’s bank account contained just $18,000. That afternoon, by chance, a representative with the Bank of New York called to approve MetPath for a loan.

The banker was nonplussed by Guy Seay, MetPath’s first finance chief, who insisted on driving into Manhattan immediately to pick up the $50,000 check in person.

“We grew so fast,” said Marvin Kaplan, one of Brown’s earliest hires, “we nearly grew ourselves to death.”

Crises kept hitting. Again in 1971, “the company was out of money, and faced going out of business entirely,” Brown wrote.

It also was worth $10 million. Brown had cracked the code that Silicon Valley startups later would claim as their own.

“We were small, and losing money. But we had sizzle, and we were growing fast,” Brown wrote about wooing a new investor. “They wanted to invest $1 million.”

The empty mansion

Brown also made risky bets in his personal life. In 1970 he bought one of the largest properties in Ridgewood, an upscale suburb in Bergen County, New Jersey. The mansion sat on five acres of wooded land. When the mansion across the street went up for sale, Brown bought it, tore it down, and doubled the size of his estate. For a while, he owned two swimming pools. He installed a tennis court.

He also had no furniture. The family owned three beds, one for Brown and his wife Cynthia, and one each for their sons, Richard and Mark. Meals were taken at a small table in the kitchen. Everywhere else the family echoed across the wide-open wood floors, their footfalls unmuffled by sofas, rugs or chairs. This emptiness lasted five years.

“We had no money, no furniture,” said Mark Brown, 54. “We didn’t have friends over for a long time because there was nothing to have friends over to. That led them to think we were snobby, rather than just living in a house well beyond our means.”

By his own description, Brown faced a crisis nearly every month that threatened to bankrupt his company. What sort of man would invite so much business risk, and compound it with so much personal risk?

“I’m motivated primarily by ego; and secondly by the delivery of medical care, which I think I can do on a far greater scale in this capacity than as a physician; and thirdly, by money,” Brown told The Record in 1974.

Five hundred miles away, the company that would grow to become Labcorp, Quest’s biggest competitor, grew just as quickly, but with less drama. Brown’s friend Jim Powell returned from Englewood Hospital to Burlington, North Carolina, where his father owned a successful chemical company.

Thomas Powell also happened to own a spare hospital. When the county hospital in Burlington moved to a new campus, Powell bought the old one. He had no immediate use for it. He just figured it might come in handy, his son Jim Powell wrote in his memoir “LabCorp: The DNA of a Corporation,” published in 2017.

Powell and Brown had learned the same lesson from Ray Gambino: If you want to get rich from automated testing, you’d better move fast. Two weeks before Powell founded Biomedical Laboratories in October 1969, a competitor based in Washington, D.C., opened its own lab in North Carolina, 30 miles from Burlington.

Unlike Brown, however, Powell had resources. His father let Biomedical Laboratories use the old hospital for free. Powell, his father and three brothers also invested $135,000 of their own money to get the new company started. Whereas Brown’s diagnostics career careened from cash infusion to disaster, Powell’s company didn’t need outside investors for years.

“We had breathing room, that’s fair to say. We had to work hard, but it was never constant crisis,” Powell said. “I think Paul was thinking in a different way than us, maybe more aggressively. He wanted to be the biggest lab in the world.”

Brown’s dream of world domination seemed to be coming true. In the mid-1970s, MetPath bought 14 acres of swampy ground by Teterboro Airport and built one of the largest laboratories in the world. Brown assigned salesmen to visit cities across the country, buy a laboratory, shut it down, and ship the samples back to New Jersey in the cargo holds of commercial airliners. Soon he opened offices in Europe. To keep his promise of speedy turnaround times, he shipped samples of blood back to the United States on the supersonic Concorde. He replaced paper test orders with computer terminals placed in doctors' offices, linked to the Teterboro lab by an early version of the internet.

After 13 years of grinding, MetPath posted its first profit in 1980, with $88 million in revenue. Brown was featured in Business Week, Fortune, Forbes and the Wall Street Journal.

“I was recognized in the clinical laboratory industry. Wall Street listened when I spoke. People knew who I was,” Brown wrote. “I would go into New York restaurants and people would recognize my face.”

Internally, however, MetPath remained bedlam. Brown kept running out of money. The company’s first computer system broke, forcing hundreds of employees to sit on the floor and sort test orders by hand.

When the New Jersey lab was complete, Brown installed a fish tank so big it turned the far end of his office into a wall of glass. He filled it with saltwater fish from the Caribbean. The tank symbolized his new status. Paul Brown had won. He had built the largest diagnostics company in the United States.

One day, Brown discovered his tank was empty. The carpet in his office was dry. He walked downstairs, where he discovered 300,000 gallons of saltwater had flooded the laboratory.

“Building a business most often resembles a state of constant damage control,” Brown wrote. “At least there never seems to be a lack of mistakes to learn from.”

Reformer. Lawbreaker.

Two months after he moved his lab out of Manhattan, in 1970, Paul Brown received a phone call from a New York City jail. A MetPath courier had been arrested for driving across the George Washington Bridge. The driver wasn’t speeding. Rather, the trip itself was illegal.

And Brown knew it.

The modern era of laboratory scandal dates at least to 1960, when New York City’s Health Department inspected the city’s 425 laboratories. Investigators discovered lab directors using unsterilized needles and syringes, according to stories by The New York Times. Some companies faked lab results for tests they never performed. Many labs operated illegally, with no doctor in charge. 

Only a quarter of the city’s 400 labs passed inspection. Thirty-five were forced to close. 

“Among the unacceptable practices discovered were fee-splitting with physicians,” in which labs paid kickbacks to doctors in exchange for work, the Times reported.

From MetPath’s earliest days, Brown presented himself as a reformer committed to ending these corrupt practices. He emphasized that MetPath’s automated machines produced more reliable results than small labs running tests by hand. He became an early president of the American Clinical Laboratory Association, a trade group that lobbied for lab safety laws.

“Lab services are poor,” Brown told The Record. “The consumers are getting screwed.”

Many lab directors in New York saw MetPath’s rapid growth and assumed Brown was bribing doctors in exchange for business. In fact, Brown abhorred the practice, and lobbied for stricter laws against it. Fortune magazine dubbed him “the Ralph Nader of testing.”

“Before I met Dr. Brown? We all questioned the things that they did.” said Stuart Seidman, who ran MetPath’s East Coast operations from 1976 to 1985. “But on arriving there, none of those rumors were true. They weren’t doing anything illegal.”

Brown’s aggressive drive for growth did push him to break other rules. To prevent lab kickbacks to doctors, New York’s reform law required labs to bill patients directly. Labs were required to be located in New York State, and to have an operating license from the state.

The law took effect months after MetPath moved to New Jersey.

“That was potentially a killer,” said Seay, MetPath’s finance chief. “If we couldn’t pick up in New York State or New York City, we didn’t have the business volume in New Jersey to keep the machines going.”

So Brown ignored the law. He kept sending couriers into New York, which got one of them arrested. And because MetPath had no license to operate in New York, MetPath was forced to split the revenue it received from insurance companies with New York doctors.

Louis Lefkowitz, New York’s famous attorney general, sued MetPath for violating New York’s lab reform law. Brown’s defense was brazen. He admitted to operating illegally, but claimed the law was an unconstitutional restraint on interstate commerce.

Eventually judges in New York agreed with Brown. MetPath won a license to operate in New York State in 1973.

Which meant New York City’s fastest-growing lab had operated illegally for three years, until it prevailed in getting the state law overturned.

The scandals continued. In 1971, Brown offered to test people living in several New Jersey cities for sickle cell anemia, according to stories in The Record. The Bergen County Medical Society warned that soliciting patients was unethical. So was testing patients for a disease with no cure. Brown countered that, as a medical doctor, he was the personal physician for every patient he tested.

The program carried a disturbing racial undertone. Since no cure existed, Brown argued, the proper response to a positive test result would be “genetic counseling.” Most people with sickle cell anemia are Black, according to the Centers for Disease Control and Prevention. The plan meant Brown, a white doctor with degrees from Harvard and Columbia who lived in an unfurnished mansion in an upscale suburb, would be advising Black people, including residents of poor neighborhoods in Newark and Paterson, New Jersey, about whether to get married or have children.

A similar issue arose the following year. Paid $900,000 to test families on welfare, MetPath charged each family an extra $3 “administrative fee.” He forced MetPath to repay any low-income families who asked for refunds. But the news coverage of this at the time was not in-depth.

As Brown and his growing team of salesmen landed bigger testing contracts, workers in the Teterboro lab struggled to keep up. There simply weren’t enough workers or machines to process all the samples coming in, said Saundra Villafane, who ran MetPath's cytology lab at the time, and Mike Walsh, the operations manager. On Tuesdays, the busiest night of the week, the lab tried to process 36,000 samples in eight hours.

Sometimes, it failed.

The problem was more than simple volume. Different health care specialties like oncology, general medicine and nursing homes require different equipment, like specialized refrigerators. Brown didn’t seem to care, Walsh said. He simply chased the biggest clients he could. If the Teterboro lab didn’t have the equipment to serve a big new client, MetPath would improvise.

“They had no defined strategy. It was more, ‘Here’s where we can grow quarter to quarter to satisfy the investors,’” Walsh said. “They were focused more on throughput and volume than they were focusing on quality.”

Like many labs, MetPath was subject to inspections by the College of American Pathologists. A regular inspection in 1978 found many problems, Walsh said. Brown responded by hiring Walsh to impose order on MetPath’s improvised chaos. Brown made similar changes to the company’s finances, he later wrote, recruiting experienced managers from huge corporations like IBM to create systems and keep investors happy.

“Paul was typical of a very good entrepreneur. He was good at being a visionary. He was very articulate and aggressive,” Walsh said. “And he was smart enough to know he needed help.”

Brown had board members from Corning, which by the late 1970s owned 10% of MetPath stock. Between them and IBM, Brown took advice from some of the most conservative business minds in the country. But even they couldn’t restrain Brown from the riskiest move of his laboratory career.

It would cost Brown the company he loved.  

Big company, bigger schemes

Paul Brown lived big. He’d built the largest lab company in the United States. He lived in a big house, on the biggest estate in town. He drove a blue Porsche 928, the company’s biggest sports car. As MetPath finally began to earn him money to furnish his home, Brown outfitted his office with an oversized antique cash register, his sons said. 

In the late 1970s, Brown placed his largest bet yet: a 200,000 square-foot lab, built from scratch, in a suburb of Chicago. Brown filled the lab with the latest test machines. But MetPath didn't have enough clients in the Midwest or the West Coast to keep those machines busy.

“I blame myself for the Chicago mess,” said Martin Gibson, a Corning executive who sat on MetPath’s board to represent Corning’s ownership stake in the company. “I should have shut down that damn thing. The building was the same size as Teterboro, for God’s sake. It was insane!”

Then came the 1981 recession. Interest rates hit 18%. This time, Brown’s dangerous mixture of pennilessness and grand ambitions couldn’t be fixed by a last-minute loan. He could sell MetPath to a corporation with enough cash to bail him out.

Or MetPath would go bankrupt.

“We started looking for someone to sell to,” Brown wrote.

Corning also was in trouble. It was a Fortune 500 company with annual revenues 14 times greater than MetPath’s. But its biggest glass customers were American carmakers and television manufacturers, Gibson said, which were losing to competition from Japan.

“We were struggling to make money,” Gibson said.

A deal was struck. Corning purchased MetPath for $140 million.

“(W)e go through money like water,” Brown told his shareholders, according to a story in The Record. “The situation with Corning resolves anxiety about capital sources.”

Brown earned $10 million from the sale of Metpath to Corning, he later wrote, and a contract to remain as chairman. But the relationship soured. Brown viewed Corning’s leadership as straightlaced and aloof, he wrote. And Corning’s leaders viewed Brown as an ethical liability, Gambino said. By 1986 Brown was forced to leave.

“They brought me in so they could dump Paul Brown,” said Gambino, who was hired as MetPath’s chief medical officer in 1983.

The recession eased. With cash and credit from Corning, MetPath went on a buying spree, snapping up dozens of smaller labs. James Powell’s company, renamed Roche Biomedical, pursued the same strategy after a buyout by the pharmaceuticals firm Hoffman-LaRoche. Throughout the 1980s and early 1990s MetPath and Roche traded places as the first and second largest laboratory companies in the United States. It became clear, however, that Corning executives didn’t think like laboratory leaders. Most viewed MetPath as a steppingstone to the biggest prize: Becoming Corning’s CEO.

“This was a segment of their career,” Seay said. “They were going to be rotated through, till they won a bigger promotion within corporate Corning.”

Intense competition to climb Corning’s corporate hierarchy created perverse incentives to goose short-term profits, Seay said.

Even if it meant breaking the law.

'An entire industry . . . was running amok'

In 1989, C. Jack Dowden noticed something strange. As sales manager for Metwest, a California-based lab, Dowden kept losing clients to a competitor called National Health Laboratories. NHL offered doctors a seemingly impossible deal: Buy a basic package of tests, and the lab would test for iron and cholesterol free of charge. 

The extra tests weren’t free, Dowden discovered. National Health was splitting off the new tests – “unbundling,” in laboratory industry parlance – and billing Medicare separately for each. MetPath purchased parts of Metwest in 1990. Soon, Dowden’s new boss told him to copy NHL’s billing scheme.

"I thought it was wrong," Dowden later told The New York Times. “It's fraud.”

Dowden quit, and filed a whistleblower lawsuit against MetPath, which by the early 1990s was part of a larger subsidiary called Corning Clinical Laboratories. Dowden’s suit helped launch Operation Labscam, one of the largest Medicare fraud investigations ever. Over seven years, federal prosecutors sued all the nation’s largest laboratory companies for similar unbundling and double-billing schemes to reap hundreds of millions of dollars from taxpayers. “An entire industry—the independent clinical laboratory industry—was running amok, billing Medicare for millions of unnecessary tests,” according to a Justice Department report.

Industry leaders, including Gibson and James Powell, said the problem was not deliberate fraud. Rather it was companies trying to interpret Medicare’s complex rules, in an industry with too many low-cost laboratories.

“One of the large labs was out ruining the market by basically giving lab work away at less than cost,” Powell said. “They were killing it for everybody.”

NHL paid $111 million in fines, and pleaded guilty to two felonies. Robert E. Draper, National Health’s CEO, was sentenced to three months in prison. MetPath paid $35 million to settle Medicare fraud charges. Metwest and Damon Clinical Laboratories, also subsidiaries of Corning, paid $124 million, including a $35-million criminal fine for Damon. The settlements with Metpath and Metwest included no admission of guilt.

Powell’s company became Labcorp in 1995. A year later, Labcorp agreed to pay $187 million in a civil settlement and criminal fines for Medicare fraud committed by Roche Biomedical and another subsidiary.

Corning was led by generations of the Houghton family, who prided themselves on conducting business with high ethical standards. The public humiliation of paying criminal fines for Medicare fraud enraged them.

“I had sweat running down the inside of my shirt when I explained to the board what was going on,” Gibson said. “That was one reason why Corning felt maybe this business should be on its own.”

Brown experienced several ethical scrapes during his leadership of MetPath. But only one involved federal prosecutors, a small 1982 case in which the company paid $98,484 to settle allegations of billing for unnecessary tests. In the settlement, MetPath denied any wrongdoing.

Still upset that Corning had banned him from the company he loved, Brown crowed at his successors’ shame.

“In the 12 years since I sold the company, the new owners have paid out more in fines for Medicare fraud than they originally paid for the company,” he wrote in his memoir. “No one seemed to know or even care what was going on. Only profit counted!”

The joint settlement against MetPath and Metwest was announced in September 1993. Corning settled all charges against Damon in October 1996.

Two months later, Corning left the testing business.

The partnership between Corning and MetPath had been a tremendous success. MetPath's profits funded Corning’s pivot from housewares to fiber-optic cable and LCD glass for computer screens, the backbone technologies of the internet. In time, revenue from Quest Diagnostics came to look like pocket change.

“Quest wasn’t a big moneymaker,” said Norman E. Garrity, who rose to become co-CEO of Corning in 1996. “This blood business wasn’t breakthrough technology like fiber.”

Few people wanted to buy a diagnostics company while the entire industry remained under federal investigation, Gibson said. And a sale would have saddled shareholders with a huge tax bill. So instead of selling its testing subsidiaries, in 1996 Corning repackaged them into a new company called Quest Diagnostics. Then it gave the whole thing away to shareholders.

For free.

“What a gift!” Brown wrote.

Strong appetite

For a man who hasn’t been CEO since 1982, Paul Brown left a lasting imprint on the corporation that is now Quest Diagnostics. The company’s website maintains a tribute to Brown’s scrappy start running tests in a bathtub in 1967. Brown’s first mega-lab, built in 1977, remained Quest’s primary facility in the New York region until 2020. (The company recently opened a new mega-lab 8 miles away.)

“He was proud of what he had built,” James Powell said of the Teterboro lab, which he visited several times. “Rightfully so.”

Ray Gambino worked at Quest Diagnostics until he retired in 2014 as chief medical officer emeritus. He was 88. Every year, the best laboratory in Quest’s network is honored with the company’s top prize, the Gambino Quality Award.

“Ray Gambino provided us a big leg up,” Powell said. “I would have never dreamed, sitting there with Paul Brown, that he would form what became Quest and that we would create what ultimately has become Labcorp.”

Regarding his other goal, to reform the ethics of diagnostic testing, Brown’s record was mixed. Unlike its competitors at the time, MetPath never was accused of paying bribes in exchange for business, or performing sub-par tests. But Brown repeatedly bent the rules to grow his business, especially in MetPath’s early years.

Some argue this remains the case for Quest Diagnostics. Since the end of Operation Labscam, Quest has settled more than two dozen cases in which competitors, state regulators and prosecutors accused the company of double billing and Medicare fraud. The company paid more than $660 million to resolve those suits. In every settlement, Quest denied any wrongdoing.

Settlements included a $241-million deal with Kamala Harris, then California's attorney general.

The case, which began as a whistleblower lawsuit by laboratory entrepreneur Chris Riedel, accused Quest of a 15-year scheme of defrauding Medicare to subsidize tests for doctors and hospitals. Similar allegations continued, including a settlement signed in August 2020, in which Quest paid $1.79 million to resolve allegations that it double-billed Medicare for over 10 years of blood draws. The company denied any wrongdoing.

Throughout, critics of Quest Diagnostics see a consistent pattern of behavior since 1969, when Brown sent a courier from New Jersey to pick up blood in New York City, in knowing violation of the law.

Some of the allegations involved billing activities that allegedly occurred at laboratories before Quest Diagnostics purchased the companies. Quest did not respond to requests for comment for this story.

Perhaps Brown’s greatest legacy is his almost maniacal drive for growth. The leaders of Quest Diagnostics would never gamble the company’s future just for the bragging rights of building the world’s biggest laboratory. But the company’s strategy remains the same as Brown’s: Buy the latest automated testing machines, build larger labs, buy competitors, and grow as big as possible. For many years, Labcorp was more aggressive than Quest in buying smaller lab companies, said Butterworth, whose company brokered many of the deals.

But during the pandemic, that relationship flipped. Revenues at Quest jumped 40% during the pandemic. Quest CEO Steve Rusckowski announced the company will invest much of that windfall in a new round of mergers and acquisitions.

“Quest and Labcorp are using money from COVID to continue consolidation,” Butterworth said. “But it’s more Quest. They are getting super aggressive.”

That’s the type of aggression Paul Brown would appreciate. In an earnings call in February 2022, Rusckowski told investors, “our M&A appetite remains strong.”