[co-author: Stephanie Kozol]*
On October 15, Maryland Attorney General Anthony G. Brown announced that his office reached a $27 million settlement with Precision Toxicology to resolve allegations that it submitted false claims to government health programs for medically unnecessary urine drug tests and provided illegal kickbacks to physicians.
Precision Toxicology, headquartered in San Diego, CA, is one of the nation’s largest urine drug testing laboratories. According to the fact recitation in the settlement documents, Precision allegedly submitted false claims for drug tests to Medicare, Medicaid, TRICARE, the Federal Employees Health Benefits Program (FEHBP), and the Department of Veterans Affairs (VA) for a period of approximately 10 years. The drug test claims submitted to the programs were allegedly medically unreasonable and unnecessary. Specifically, Precision allegedly utilized nonallowable blanket orders for urine drug tests without physician authorization and offered free point-of-care drug test cups to physicians in exchange for referrals, in violation of the Anti-Kickback Statute.
The lawsuit came about after several qui tam actions were filed under the False Claims Act. Ultimately, the government elected to intervene.
To resolve these allegations, Precision Toxicology agreed to pay a total of $27 million. This amount includes $18,286,680.59 to the federal government and $8,713,319.41 to the states of Maryland, Illinois, Minnesota, Virginia, Georgia, and Colorado. The relators will also receive a share of the settlement proceeds as stipulated under the False Claims Act. In addition to the monetary settlement, Precision agreed to enter a five-year corporate integrity agreement with the Department of Health and Human Services Office of Inspector General. The agreement will allow the federal government to monitor Precision’s operations over that period.
Why It Matters
The coordination between state and federal regulators under the False Claims Act reflects a broader trend of collaboration. Regulators have learned that by pooling resources and expertise, they can leverage their authority to pressure industry players and attempt to dissuade certain conduct more broadly. The collaborative synergies between federal and state regulators are especially strong in the health care industry. For example, the U.S. Department of Health and Human Services’ Office of Inspector General has a longstanding history of working closely with state attorneys general’s Medicaid Fraud Control Units.
*Senior Government Relations Manager
