Attorney General William Tong, U.S. Attorney Leonard C. Boyle, and Special Agent in Charge Phillip Coyne of the U.S. Department of Health and Human Services, Office of Inspector General announced today that Redwood Toxicology Laboratory, Inc. has entered into a civil settlement agreement with the federal and state governments in which it will pay nearly $4.8 million to resolve allegations it overcharged the Connecticut Medicaid program for certain laboratory services.
Redwood Toxicology Laboratory (“RTL”), with a headquarters located in Santa Rosa, California, provides laboratory-testing services, specifically urine drug testing services, for substance abuse patients enrolled in the Connecticut Medicaid program. The government alleges that RTL violated Connecticut’s so-called “Most Favored Nation” regulation (Conn. Agencies Regs. § 17b-262-649), which provides, in essence, that clinical laboratories should not seek payment from Connecticut Medicaid for services at a price that is higher than the lowest price the laboratory charges for the same or similar services from other third parties. Specifically, the government alleges that RTL regularly accepted payments from Connecticut Medicaid for certain urine drug tests at the rate of $38 per test, while at the same time charging other third parties from $2 to $10.50 for the same or substantially similar urine drug tests.