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Precision Toxicology Settles $27M False Claims Act Case Regarding Fraudulent Drug Testing and Illegal Kickbacks
On October 15, 2024, The Department of Justice and Maryland Attorney General Anthony G. Brown announced a $27 million False Claims Act settlement with Precision Toxicology, a major urine drug testing lab, over allegations of submitting false claims to Medicare, Medicaid, and other federal healthcare programs.
The settlement agreement alleged that from January 1, 2013, through December 31, 2022, Precision Toxicology billed federal health programs for an excessive volume of urine drug tests that were unnecessary and not individually tailored to patient needs. According to the allegations, Precision’s use of “custom profiles” led physicians to place broad-standing orders for urine drug tests, bypassing an assessment of each patient’s unique medical requirements. Such practices contravened federal guidelines, which mandate that health program reimbursements only cover treatments deemed reasonable and medically necessary.
Additionally, the U.S. alleged that Precision provided physicians with free point-of-care urine drug testing supplies, with an expectation that these doctors would return the samples to Precision for further testing—a practice that allegedly violated the Anti-Kickback Statute. This statute prohibits any laboratory from offering physicians anything of value as an inducement for referrals, as it can compromise the integrity of medical decision-making (1).
As part of the settlement, Precision Toxicology has entered into a five-year Corporate Integrity Agreement (CIA) with the Department of Health and Human Services (HHS) to ensure compliance with healthcare standards going forward (1).
The relator who initially reported Precision’s practices under the False Claims Act will receive over $2.7 million as a whistleblower reward. The False Claims Act allows whistleblowers to file qui tam lawsuits on behalf of the government and receive a portion of the recovery, incentivizing the reporting of fraud against federal programs.
Jason T. Brown, former FBI Special Agent and head of the firm Brown, LLC, noted, “This settlement is a significant win for whistleblowers and healthcare integrity. When entities prioritize profit over patient well-being, whistleblowers play a critical role in restoring accountability. Our firm remains dedicated to supporting those who courageously come forward to expose fraud. One can’t help but notice that for a couple called Precision, its conduct was anything but unless the precision was in allegedly defrauding the taxpayers.” Brown went on to comment the work that the attorneys for the government and private counsel did to marshal a settlement along these lines. The firm Brown, LLC is coming off an amazing year representing whistleblowers including one of the biggest cases of the year in which one of its whistleblowers were part of a combined $950 million settlement that encompassed a $432 million False Claims Act settlement.
This case highlights the critical role of whistleblowers in protecting federal funds allocated for patient care and emphasizes the government’s commitment to investigating healthcare fraud. The settlement includes $18.2 million allocated to the federal government and $8.7 million to impacted states, including Maryland and Colorado, among others.
For those aware of similar healthcare fraud practices, the whistleblower provisions of the False Claims Act provide legal protections and potential financial rewards for reporting fraud, but to invoke the Act properly you must file with a whistleblower law firm.