Precision Toxicology has agreed to pay $27 million to settle allegations first brought by whistleblowers in three cases, that the company billed the federal government for unnecessary drug tests and paid kickbacks to doctors, the Department of Justice (DOJ) said.
Drug testing has ramped up in recent years, due to the opioid drug epidemic, and with it allegations of fraud and kickbacks.
The cases against Precision, the largest urine drug testing company in the U.S., are three of numerous complaints made against urine drug testing companies, for unnecessary billing.
The complaints against Precision, filed on behalf of the federal government and multiple states, alleged that the company caused physicians to file bills to the government for excessive and unnecessary urine drug tests, from Jan. 1, 2013 through Dec. 31, 2022, according to the settlement agreement.
Two of the cases were filed in U.S. District Court for the District of Maryland (United States and Maryland ex rel. Hudak v. Precision Toxicology LLC; and United States, Illinois and Minnesota ex rel. Buonauro v. Precision Diagnostics LLC et al), and a third, sealed case was filed in U.S. District Court for the District of Colorado.
“Our office will not allow companies to fraudulently obtain taxpayer money by funneling Marylanders into medically unnecessary drug tests,” said Maryland Attorney General Anthony Brown, in a press release. “The opioid epidemic is a national scourge. Companies’ attempts to take advantage of that public health crisis will not be tolerated.”
Federally-funded health programs require that services be reasonable and medically necessary, in order for reimbursement. Labs also can’t provide incentives to doctors in exchange for referrals, or else be charged with violating the Anti-Kickback Statute.
The physicians’ tests were ordered in bulk, without determining individually whether a urine test was warranted, the DOJ said in a press release. Precision provided kickbacks to the doctors by giving them free specimen cups, on the promise that the cups would be used for urine samples and returned to Precision for drug testing, the DOJ alleged.
Precision agreed to a five-year Corporate Integrity Agreement as part of the settlement, under which the Office of the Inspector General of the U.S. Department of Health and Human Services will monitor the company’s operations and mandate reforms as needed.
About $18.2 million of the settlement will be paid to the federal government, and Maryland will receive $5.7 million. Colorado, Georgia, Illinois, Minnesota and Virginia will also receive a share.
Whistleblower Bryce Hudak, a former clinical director of a Baltimore drug treatment center, will receive $2.7 million, the DOJ said.
Precision was not immediately available to comment.
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