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Alere plunges on reports of criminal probe over Medicare, Medicaid billing

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Federal criminal investigators have opened a new front in a probe of diagnostic testing company Alere, according to a new report that comes as the firm continues trying to sell itself to Abbott Labs in a multibillion-dollar deal.

The Wall Street Journal reported Wednesday afternoon that Alere was hit was a subpoena seeking patient-billing records in June by the criminal-fraud section of the U.S. Justice Department.

The subpoena sought information about Alere's alleged "efforts to collect copayments from patients, as well as forms submitted on their behalf to government programs such as Medicare," according to the Journal, whose story cited sources familiar with the probe.

Alere shares plummeted by more than 28 percent to close at $31.60 on the heels of the news. In after-hours trading, the stock recovered some lost ground.

The newspaper, which noted that federal law prohibits health-care companies from covering medical payments for people insured by government programs such as Medicare, also said that prosecutors are looking into whether Alere gave doctors any money or "delivered items of value" to physicians.

In March, Alere revealed that the Justice Department served the company with a subpoena seeking information about sales practices overseas. That probe relates to the Foreign Corrupt Practices Act.

Both Alere and Abbott Labs declined to comment when contacted by CNBC. The Justice Department had no immediate comment.

Abbott's proposed $5.8 billion purchase of Alere, which was first revealed in February, has yet to close.

During a conference call last week, Abbott CEO Miles White said, "I have no particular predictions to make," referring to the deal, according to the the Chicago Tribune. The paper noted that Abbott had earlier tried to cancel the deal following Alere's disclosure of the subpoena in March.