Precision Toxicology, operating as Precision Diagnostics, has agreed to pay $27 million to resolve allegations of violating the False Claims Act and similar state statutes. The company was accused of billing Medicare, Medicaid, and other federal health care programs for medically unnecessary urine drug tests and providing free items to physicians who referred laboratory testing business to Precision. Based in San Diego, Precision is one of the largest urine drug testing laboratories in the United States.
“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.”
The United States alleged that from January 1, 2013, through December 31, 2022, Precision systematically billed federal health care programs for excessive and unnecessary urine drug testing. It was contended that Precision caused physicians to order excessive numbers of urine drug tests through "custom profiles," which acted as standing orders without individualized assessments of patients' needs. This practice violated federal rules limiting payment to services deemed reasonable and medically necessary.
Additionally, it was alleged that Precision's provision of free point-of-care urine drug test cups to physicians—conditioned on returning specimens for further testing—violated the Anti-Kickback Statute. This statute generally prohibits laboratories from giving anything of value in exchange for referrals.
“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 taxpayers and the integrity of our vital federal health programs,” said Acting U.S. Attorney Matthew Kirsch for the District of Colorado.
In addition to the settlement under the False Claims Act, Precision has entered into a five-year Corporate Integrity Agreement 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 $27 million settlement amount, $18.2 million will be paid to the United States while remaining funds will go to impacted states including Maryland, Illinois, Minnesota, Virginia, Georgia, and Colorado.
The allegations were initially brought by whistleblowers under qui tam provisions allowing private parties to sue on behalf of the government and share any recovery. Two cases are captioned United States and Maryland ex rel. Hudak v. Precision Toxicology LLC (ELH-18-1510) and United States, Illinois and Minnesota ex rel. Buonauro v. Precision Diagnostics LLC et al., (ELH-21-3231). The third case remains partially sealed in Colorado.
Bryce Hudak will receive $2,743,002 from this recovery under federal law.
The resolution followed coordinated efforts between multiple federal agencies including offices within HHS-OIG; U.S Attorneys’ Offices in Maryland, Colorado, Connecticut; state attorney generals; among others.
Attorneys Vanessa Reed and Vince Vaccarella from Civil Division’s Fraud Section along with several Assistant U.S Attorneys handled this matter with additional assistance from state attorneys general Raja Mishra (Maryland) and Ian Garland (Florida).
It should be noted these claims are allegations only with no determination made regarding liability.