Medical lab sues
in contract dispute

The legal action alleges
information was leaked
and bids were late

By Anthony Sommer
Star-Bulletin

LIHUE -- Clinical Laboratories of Hawaii Inc. has sued Wilcox Memorial Hospital and its competitor, Diagnostic Laboratory Services Inc., over a contract to provide all laboratory services to Wilcox, Kauai's largest hospital.

The lawsuit alleges that Diagnostic Laboratory Services, a subsidiary of the Queen's Medical Center, threatened Wilcox that if it did not receive the contract there "would be a significant negative impact" on Wilcox's relationship with the Queen Emma Foundation. Wilcox is a major beneficiary of the foundation, according to the lawsuit.

The lawsuit also claims that Wilcox officials improperly allowed Diagnostic Laboratory Services to submit a bid after the bidding deadline, leaked Clinical Laboratories' bid information to Diagnostic Laboratory Services, then allowed Diagnostic Laboratories to file an amended bid.

The value of the laboratory contract is not specified, but it is believed to be substantial. Paul Maki, attorney for Clinical Laboratories, said several proposals for different lengths of time were submitted.

Until this spring, Wilcox performed all of its own laboratory work.

A hearing on a request for a temporary restraining order halting the contract Diagnostic Laboratory Services received was scheduled this afternoon before Circuit Judge George Masuoka.

The hospital's board of directors awarded the contract to Diagnostic Laboratory Services on May 12. The lawsuit was filed Tuesday.

Wilcox officials refused comment on the lawsuit, and Diagnostic Laboratory Services President Dr. John Edwards said, "An answer is being prepared."

Both Diagnostic Services Laboratories and Clinical Laboratories are headquartered in Honolulu.

According to the lawsuit, Wilcox sought a bid from Clinical Laboratories in March and signed a confidentiality agreement. Clinical Laboratories said it filed the only bid received by the hospital by the April 23 deadline set by Wilcox.

Diagnostic Laboratory Services submitted a bid April 30, a week after the deadline, and May 7 submitted a second proposal. On May 11, it supplemented its proposal with financial information, the lawsuit states.

"When DLS submitted its second proposal, DLS had access to CLH's proposal and the opportunity to respond to it," according to the lawsuit.

"Somebody at the hospital gave them our proposal," said Maki. "We don't know who it was yet, but we're going to find out."