Precision Toxicology Agrees to $27 Million Settlement for Alleged False Claims Act Violations

National News (10/3/2024) – San Diego-based Precision Toxicology, also known as Precision Diagnostics, has agreed to pay $27 million to settle allegations of violations related to the False Claims Act and similar state laws. The claims involve improper billing practices for unnecessary urine drug testing and providing illegal incentives to healthcare providers in exchange for laboratory testing referrals.

The settlement addresses allegations that from January 1, 2013, through December 31, 2022, Precision routinely billed Medicare, Medicaid, and other federal healthcare programs for urine drug tests that were deemed medically unnecessary. The Justice Department asserted that Precision promoted “custom profiles” that led physicians to order a large number of tests without individualized medical assessments, in violation of federal healthcare program regulations, which require that services be necessary and reasonable for patient care.

Additionally, Precision was accused of violating the Anti-Kickback Statute by offering free point-of-care urine drug test cups to physicians who agreed to send specimens to Precision for further testing. The Anti-Kickback Statute prohibits the exchange of goods or services in return for referrals of business involving federal healthcare programs.

U.S. Attorney for the District of Maryland, Erek L. Barron, emphasized the importance of protecting healthcare programs from fraud, stating, “Taxpayers deserve nothing less.” Principal Deputy Assistant Attorney General Brian M. Boynton echoed these sentiments, emphasizing that laboratory tests should be ordered based on patient needs, not to inflate profits.

As part of the settlement, Precision entered into a five-year Corporate Integrity Agreement (CIA) with the U.S. Department of Health and Human Services (HHS) Office of Inspector General (OIG). Special Agent in Charge Maureen R. Dixon of the HHS-OIG underscored the agency’s commitment to investigating violations of the False Claims Act and protecting the integrity of federal healthcare programs.

The settlement also resolves three whistleblower lawsuits filed under the False Claims Act’s qui tam provisions, which allow private individuals to file suits on behalf of the government. The federal government intervened in two of these cases. Whistleblower Bryce Hudak will receive approximately $2.7 million as part of the settlement.

Of the total $27 million settlement, $18.2 million will be allocated to the United States, while the remaining amount will be distributed among six states, including Maryland, Illinois, Minnesota, Virginia, Georgia, and Colorado, for their share of Medicaid claims.

The case was investigated and resolved through collaboration between several federal and state entities, including the Department of Justice, U.S. Attorney’s Offices in Maryland, Colorado, and Connecticut, as well as various state attorney general offices and federal healthcare fraud enforcement agencies.

The claims resolved in the settlement are allegations, and no determination of liability has been made.

Federal agencies continue to encourage the reporting of fraud, waste, and abuse through the Department of Health and Human Services’ fraud hotline at 800-HHS-TIPS.

Story by multiple RFHC contributors