Hawai‘i to receive restitution from toxicology lab following allegations of unnecessary drug testing

The state of Hawai‘i has joined the District of Columbia and 43 other states in a settlement against a toxicology laboratory accused of billing Medicare, Medicaid and other federal health care programs for medically unnecessary urine drug tests.

Precision Toxicology, doing business as Precision Diagnostics, agreed to pay out $27 million. Hawai‘i will receive $101,416.16 in restitution. Hawaiʻi’s share of the restitution is directly related to identified instances wherein Precision had double-billed the Hawaiʻi Medicaid Program.

Click here to read the settlement.

According to a press release from Hawai‘i Department of Justice, Precision’s payouts to the states will resolve the allegations outlined in three lawsuits filed by whistleblowers. From Jan. 1, 2013, through Dec. 31, 2022, Precision submitted or caused false claims to be submitted to Medicaid for UDT, or urine drug test, that were not medically reasonable and necessary for the diagnosis or treatment of an illness or injury or to improve the functioning of a malformed body part.

Specifically, the release indicates that Precision allegedly developed and implemented a policy and practice of utilizing non-allowable blanket orders for UDT without any physician making an individualized determination that the UDT was medically necessary or reasonable for the particular patients for whom the tests were ordered. The settlement also resolves allegations that Precision, during the period of Jan. 1, 2013, through June 30, 2014, provided free point-of-care UDT cups to physicians in exchange for UDT referrals, in violation of the Anti-Kickback Statute.

A National Association of Medicaid Fraud Control Units Team investigated the allegations in conjunction with the Department of Justice and United States Attorney’s Offices in Colorado, Connecticut and Maryland.

Landon M.M. Murata, director of the Medicaid Fraud Control Unit, Department of the Attorney General (Hawaiʻi MFCU), and Judy Mohr Peterson, PhD., Med-QUEST division administrator, Department of Human Services, entered into the settlement agreement on behalf of the state of Hawaiʻi.

The Hawaiʻi MFCU is a specialized unit within the Department of the Attorney General that is charged with conducting criminal and civil investigations and prosecutions of (1) provider fraud against the Medicaid Program, (2) fraud in the administration of the Medicaid Program, and (3) abuse and neglect of Medicaid beneficiaries and residents of board and care facilities throughout the state of Hawaiʻi.

“We are committed to aggressively pursuing those who ignore medical necessity in favor of increasing profits at the expense of patients, taxpayers, and Hawaiʻi’s critical healthcare programs,” said Director Murata.

The Hawaiʻi MFCU is funded through a grant totaling $3,670,956 for Federal Fiscal Year 2025 from the U.S. Department of Health and Human Services – Office of Inspector General. The federal share of these funds is 75%, totaling $2,753,220. The state matching share of these funds is 25%, totaling $917,736, and is provided by the Medicaid Investigations Recovery Fund.