Substance Abuse Treatment Labs: Billing the Highest UDT Level Despite the Warning Signs

In the Substance Abuse Treatment Labs settlement, the Greensboro laboratory and its owner agreed to pay $850,000 to resolve allegations that they billed North Carolina Medicaid for medically unnecessary urine drug testing at the highest payment level. The government’s allegation puts the billing decision at the center of the case: the lab sought the most expensive level despite clear signs that the tests were unnecessary. For someone inside a laboratory, the question is what happened between the order and the claim.

The Medicaid Claims Behind the Settlement

The United States and North Carolina alleged that Substance Abuse Treatment Labs and its owner submitted the false claims between January 2018 and January 2022. The Justice Department announced the civil False Claims Act settlement on January 28, 2025.

According to the announcement, the claims sought the highest dollar reimbursement for urine drug tests even though there were clear signs that the tests were not medically necessary. Medicaid was being asked to pay the most for testing the government said patients did not need. Taxpayers were funding tests instead of the patient care that money was meant to support.

That is the part a billing or clinical employee may recognize: information about the patient’s need for testing and a claim that proceeds despite it.

When Are Toxicology Tests Unnecessary?

Toxicology tests are unnecessary when their scope or repetition lacks a patient-specific clinical reason.

Urine testing has a clinical purpose beyond generating a result. The 2014 Pain Physician paper Ethical Perspectives on Urine Drug Screening for Pain Physicians describes its use in monitoring prescribed medication and detecting other drug use. Those are questions about a particular patient’s care.

The paper connects the clinical decision to the financial incentive:

The paper describes a tension in pain practice: a test produces information for treatment and revenue for a business. The patient’s reason for needing it can get lost when the revenue becomes the reason for ordering it.

Why the Highest UDT Level Matters

In Medicare’s definitive-testing payment structure, the tiers depend on the number of drug classes tested. Broader tiers carry higher payment rates. That creates a financial reason to favor a larger menu.

A similar Bluewater Toxicology case shows how the work and the bill can diverge. The government alleged that Bluewater billed for 22 or more drug classes while testing fewer. It also alleged that claims lacked sufficient documentation of the treating physician’s intent to order the billed test.

Bluewater’s allegation concerns what the laboratory actually tested and what the physician ordered. The Substance Abuse Treatment Labs allegation centers on medical need: seeking the highest payment level despite signs that the tests were unnecessary.

The Laboratory and the Clinician Hold Different Records

The laboratory’s claim and the treating clinician’s chart tell different parts of the testing story. An insider’s knowledge can connect decisions that otherwise sit in separate files.

Under Medicare’s documentation rules, the clinician keeps the reason for the test in the patient’s chart. The lab keeps what it received from the clinician and documentation showing that the claim matches that information.

Other Urine Testing Cases

The Logan Laboratories settlement and Precision Toxicology’s settlement also resolved allegations of medically unnecessary urine drug testing. In Millennium Health’s case, the government alleged medically unnecessary urine and genetic testing.

You Saw the Orders Become Claims

If you know why a laboratory kept billing for broad urine testing despite concerns about medical need, speak to one of our Whistleblower Experts about the orders that became claims. We develop the case with you, bring in healthcare whistleblower lawyers who understand laboratory billing and Medicaid testing, and stay beside you as the case moves forward. A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers.