Averhealth: Drug-Test Confirmation Under a Child-Welfare Contract

In the Averhealth False Claims Act settlement, Avertest LLC agreed to pay $1,344,621 to resolve allegations that it billed Michigan for drug tests that lacked the confirmation method its child-welfare contract required. A laboratory director brought the whistleblower case. Her complaint described what sat behind the finished reports: old calibration data substituted for current data, altered controls and results released despite problems inside the laboratory.

Avertest does business nationwide as Averhealth. The forensic drug-testing company, based in Richmond, Virginia, began testing for Michigan’s Children’s Protective Services and Foster Care programs in 2019. The Justice Department announced the company’s civil settlement on June 20, 2024.

The Child-Welfare Contract and the Federal Money

Michigan’s Department of Health and Human Services bought drug screening and confirmation testing from Averhealth using federal Social Services Block Grant funds.

The government’s allegation covered positive oral-fluid results from May 15, 2019, through November 30, 2020. According to the settlement announcement, Averhealth knowingly submitted or caused claims for payment, and made statements important to those claims, for tests that failed to conform to the contract. The promised confirmation had to use a mass-spectrometric method analytically different from the screening method.

That requirement connected the work inside the laboratory to the bill outside it. Michigan was paying for a service with a specified confirmation step. The government alleged that Averhealth claimed payment for positive results without that step. Taxpayers paid for a check on those results that the government alleged they never got.

Why the Confirmation Method Mattered

Michigan’s contract called for an analytically different mass-spectrometric confirmation of positive oral-fluid results. That requirement made the confirmation method part of the service for which Averhealth sought payment.

What the Laboratory Director Alleged

The whistleblower’s complaint described alleged decisions about how results were produced, checked and reported. Its account reached into calibration curves, internal standards, quality controls and the testing shown to accreditation inspectors.

Old Calibration Data for a New Run

The complaint alleged that Averhealth continued testing when the calibration was unacceptable and searched older runs for data that would pass:

In the whistleblower’s account, the laboratory found a passing curve in an older run instead of fixing the current one.

The complaint also alleged that employees changed internal standards, changed the regression used for calibration curves and substituted historical quality controls for current ones. It described a reporting threshold selected according to the lowest calibrator that met reporting criteria on that run, so the threshold could change from day to day.

A Result Sent Despite Failed Controls

The complaint gave a specific example involving a hair sample and morphine:

The whistleblower alleged that the laboratory knew the controls had failed and sent the result anyway.

The Process Shown to Inspectors

The whistleblower alleged that Averhealth followed the College of American Pathologists’ forensic testing guidelines for only one client and instructed the laboratory manager to show that compliant process to the inspector. She also alleged that required screening controls were intentionally omitted.

For Michigan samples, the complaint alleged a further departure from the promised process: Averhealth lacked the ability to screen at the low drug concentrations the contract specified and therefore skipped the screening portion.

When a Laboratory Report Reaches a Family

The complaint alleged that a falsely positive drug test in a divorce proceeding left a parent able to see his children only under supervision.

The person receiving a report sees the result. The laboratory employee may also see the failed controls, the older calibration curve and the decision to send the report anyway. The parent in the complaint’s example bore the consequences of a result the whistleblower alleged was false.

The Testing Promise in a Separate Michigan Dispute

A separate Livingston County contract dispute shows how specific a purchaser’s testing requirements can be. In its 2021 opinion describing the negotiations, the Sixth Circuit recounted that the county requested GC/MS confirmation, while Averhealth’s proposal offered a standard confirmation test without identifying the type. County employees later objected that Averhealth used LC-MS/MS.

The county ended the arrangement, citing the testing method among its concerns. LC-MS/MS also uses mass spectrometry, so the dispute concerned which confirmation method the county specified.

A Former Chief Executive’s Separate Civil Settlement

The government’s separate agreement with Averhealth’s former chief executive, signed in June 2026, required him to pay $150,000. It identified him as the executive who signed the Michigan contract for the company and alleged that he knowingly submitted or caused false claims and made false statements concerning the nonconforming oral-fluid tests.

The government’s allegations reached the executive who signed the contract for the company.

LabTox Shows Why the Payer Matters

The LabTox case involved another connection between court-ordered testing and government payment. In his criminal guilty plea, LabTox’s owner admitted billing Medicare and Kentucky Medicaid for urine tests ordered by courts for judicial proceedings that were not medically necessary.

The allegation against Averhealth concerned the testing method promised under a federally funded child-welfare contract. LabTox’s admission concerned billing health care programs for nonmedical tests. Both put the purpose of the testing, the service actually provided and the source of payment at the center of the case.

The Whistleblower’s View Inside the Laboratory

The Justice Department announced that the laboratory director would receive a share of the recovery. Her complaint’s value lies in its account of decisions hidden behind the final test report: which data were used, which controls failed and what happened before results left the laboratory.

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers.

For a laboratory or contract employee, the useful knowledge may sit in the gap between the testing promised and the work performed.

You Saw How the Result Was Produced

If you know how a laboratory’s actual testing departed from what it promised a government customer, speak to one of our Whistleblower Experts about how the results were really produced. We build your strongest laboratory fraud whistleblower case around that knowledge, bring in laboratory fraud whistleblower lawyers who understand testing and government payment, and stay with you through the pursuit of a recovery.