The U.S. government claimed that from January 1, 2013, to December 31, 2022, the company systematically billed federal programs for excessive urine drug tests. A key issue was the promotion of “custom profiles,” which effectively created standing orders for numerous tests without proper assessment of each patient's specific needs.
Precision Toxicology, operating as Precision Diagnostics, has reached a $27 million settlement to resolve allegations of violating the False Claims Act and similar state laws. The company was accused of improperly billing Medicare, Medicaid, and other federal health care programs for medically unnecessary urine drug tests. Additionally, Precision allegedly provided free items to physicians in exchange for referrals of costly lab testing.
Headquartered in San Diego, Precision is one of the largest urine drug testing laboratories in the country. The U.S. government claimed that from January 1, 2013, to December 31, 2022, the company systematically billed federal programs for excessive urine drug tests. A key issue was the promotion of “custom profiles,” which effectively created standing orders for numerous tests without proper assessment of each patient's specific needs. This practice breached federal guidelines that dictate payment only for services deemed reasonable and medically necessary.
“When laboratories ignore medical needs and increase testing for their own profits, the Department of Justice will act to protect the taxpayers and the integrity of our vital federal health programs,” said Acting U.S. Attorney Matthew Kirsch for the District of Colorado.
Moreover, the government alleged that Precision's practice of supplying free urine drug test cups to physicians, contingent on their agreement to send urine samples for further testing, violated the Anti-Kickback Statute. This law prohibits laboratories from offering anything of value in exchange for test referrals.
As part of the settlement, Precision has entered a five-year Corporate Integrity Agreement (CIA) with the Department of Health and Human Services Office of Inspector General. Of the total settlement amount, $18.2 million will go to the federal government, while the remaining funds will be distributed to affected states, including Maryland, Illinois, Minnesota, Virginia, Georgia, and Colorado, for their Medicaid shares.
The allegations that led to this settlement originated from three lawsuits filed by whistleblowers under the qui tam provisions of the False Claims Act, which enable private individuals to sue on behalf of the government and share in the recovery. One whistleblower, Bryce Hudak, will receive $2,743,002 from the federal recovery.
“Today’s settlement demonstrates that investigating violations of the False Claims Act is a top priority,” said Special Agent in Charge Maureen R. Dixon of HHS-OIG. “HHS-OIG will continue to work with the Department of Justice to ensure the integrity of federal health care programs.”
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