Precision Toxicology, doing business as Precision Diagnostics, has agreed to pay $27 million to resolve alleged violations of the False Claims Act and similar state statutes for billing Medicare, Medicaid and other federal healthcare programs for medically unnecessary urine drug tests and for providing free items to physicians who agreed to refer expensive laboratory testing business to Precision. Precision, headquartered in San Diego, is one of the nation’s largest urine drug testing laboratories.
“The Justice Department is committed to ensuring that laboratory tests are ordered based on each patient’s medical needs and not just to increase laboratory profits,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “We will not tolerate practices that unnecessarily increase the costs of federal health care programs and result in the misuse of taxpayer funds.”
In the settlement agreement, the United States alleged that Precision systematically billed federal health care programs for excessive and unnecessary urine drug testing from January 1, 2013, through December 31, 2022.
In particular, the United States contended that Precision caused physicians to order excessive numbers of urine drug tests, in part through the promotion of “custom profiles,” which were, in effect, standing orders that caused physicians to order a large number of tests without an individualised assessment of each patient’s needs.
This practice violated federal health care program rules limiting payment to reasonable and medically necessary services for the treatment and diagnosis of an individual patient’s illness or injury.
The United States also alleged that Precision’s provision of free point-of-care urine drug test cups to physicians — expressly conditioned on the physicians’ agreement to return the urine specimens to Precision for additional testing — violated the Anti-Kickback Statute. The Anti-Kickback Statute generally prohibits laboratories from giving physicians anything of value in exchange for referrals of tests.
“We aggressively pursue those who defraud these critical healthcare programs and take money meant for needy patients. Taxpayers deserve nothing less, “ said U.S. Attorney Erek L. Barron for the District of Maryland.
“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.
In connection with the False Claims Act settlement, Precision has also entered into a five-year Corporate Integrity Agreement (CIA) with the Department of Health and Human Services Office of Inspector General (HHS-OIG).
“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.”
Of the settlement amount, $18.2 million will be paid to the United States, and the remainder will be paid to the impacted states, including Maryland, Illinois, Minnesota, Virginia, Georgia and Colorado, for the states’ share of Medicaid.