Carolina Liquid Chemistries: Marketing the Analyzer and Reagents as an Unapproved Testing System

In the Carolina Liquid Chemistries criminal case, the company admitted developing and marketing urine drug-testing systems without Food and Drug Administration approval. It bought reagents and analyzers, combined them, and marketed the combination for testing human urine for drugs of abuse.

The company pleaded guilty on September 3, 2019, to marketing adulterated medical devices. The Justice Department’s account of the plea describes a company operating in Winston-Salem, North Carolina, and Brea, California.

What Carolina Liquid Chemistries Marketed

Carolina Liquid Chemistries admitted that it combined purchased reagents with automated photometric chemistry analyzers and marketed the resulting systems without Food and Drug Administration approval from 2010 to 2014. The components came from different suppliers: reagents from a company in Northern California, and analyzers from a Japanese company and a Chinese company.

According to the government’s account of the plea agreement, the company acknowledged that the combined system required Food and Drug Administration approval before marketing. An application would have needed to demonstrate the specific medical uses for which the devices were useful and that the systems could perform those analyses safely and effectively. Carolina Liquid Chemistries admitted that it had never filed that application.

The company sold the testing system without even applying for the review it acknowledged it needed.

The Congressional Research Service describes laboratory-developed tests as tests designed, manufactured and used within a single laboratory, in contrast to commercially available test kits. Carolina Liquid Chemistries’ admission concerned a combined product it marketed to customers.

Can a Toxicology Report Be Wrong?

Yes. Urine drug screening can produce false-positive and false-negative results, and the testing method affects what a result can establish. That is why a product’s claimed capability matters to the people buying it and the clinicians using its results.

A 2021 review of urine drug screening in The Journal of Family Practice explains the distinction. Immunoassay uses antibodies to detect a drug or its metabolites and provides rapid screening results. Chromatography separates components in a specimen, and mass spectrometry identifies them, producing confirmatory results.

The review describes immunoassay results as presumptive. Interference can produce either kind of error, while liquid chromatography with mass spectrometry offers more specific confirmation at greater cost and with longer waits. The paper puts the interpretive problem plainly:

For clinicians and patients, the stakes are the treatment decisions made from those results. The review explains that acting on presumptive results can harm the treatment plan and the patient-provider relationship. That gives the performance question a purpose beyond a product brochure: what can a clinician safely do with the result?

When the Product Supplier Causes the False Claim

In the Nichols Institute Diagnostics case, the government alleged that the supplier’s test kits caused laboratories and medical providers to submit false claims to federal health care programs.

Why Drug-Testing Methods Matter to Payment

Rapid immunoassay screening is comparatively inexpensive, while confirmatory testing costs more, as the clinical review explains. A sales proposition about testing capability, a laboratory’s choice of method and a reimbursement category each answer a different question. Our work is to connect the specific product statements and performance information to the tests and claims they affected.

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. For someone inside a diagnostic-products business, the Nichols case shows why the supplier’s part of that story can matter even when another business sends the bill.

You Know the System Behind the Sales Pitch

If you know how an analyzer and its reagents were marketed, or where the performance data diverged from the pitch, speak with our whistleblower experts. We build the case with you and bring in laboratory fraud whistleblower lawyers who understand diagnostic products and the claims they can cause. We stay with you through the process, connecting what you know about the system to your strongest laboratory fraud whistleblower case.