Medical laboratory operator Quest Diagnostics Inc. has agreed to pay $241 million to resolve a civil lawsuit over California Medicaid payments.

The Madison, N.J., company said late Monday that it is settling a lawsuit that alleged that Quest didn't comply with California regulations, leading the state's Medicaid program to overpay for lab testing services. Quest will provide Medi-Cal with a discount until the end of July 2012 and agreed to pricing reporting obligations for a limited time.

The settlement releases Quest from all claims alleged in the lawsuit.

Due to the timing of the agreement, Quest is booking a $236 million pretax charge to its first-quarter results. It is now reporting a loss of $53 million, or 33 cents per share, for that quarter, down from net income of $141 million, or 86 cents per share, as previously reported.

Adjusted earnings, which exclude the lawsuit charge, remain unchanged at $1 per share. Quest also backed its 2011 forecast for adjusted earnings of $4.25 to $4.45 per share. The adjusted outlook excludes the Medi-Cal charge, the estimated impact of severe weather, charges for workforce reductions, and costs associated with the company's Athena and Celera deals.

A company spokeswoman said Quest's board and California regulators still must approve the settlement.

Company shares climbed 22 cents to close at $57.