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Redwood Toxicology Lab Pays $4.8M to Settle Medicaid Pricing Violations

NEW YORK – The US Department of Health and Human Services and the Connecticut Attorney General's office said Monday that they have reached a civil settlement with Redwood Toxicology Laboratory to resolve allegations that it overcharged the Connecticut Medicaid program for lab services.

Under the agreement, Santa Rosa, California-based Redwood has paid roughly $4.8 million covering claims submitted to the Connecticut Medicaid program between Jan. 1, 2015, and Feb. 24, 2018.

The government alleged that Redwood violated Connecticut's "Most Favored Nation" regulation, which requires that clinical labs do not bill the state's Medicaid program at rates higher than the lowest price the lab charges other parties for the same service. The government alleged that Redwood charged the Medicaid program $38 per test for certain urine drug tests for which it charged other customers between $2 and $10.50.

"We are committed to ensuring that public funds used for substance abuse treatment are properly spent, and clinical laboratories that charge government health care programs a higher price than they charge to other providers for the same or similar services will be held accountable," said Leonard Boyle, US attorney for the District of Connecticut.