Calloway to pay $20M to settle urine test dispute

WOBURN, Mass. (Legal Newsline) – Massachusetts Attorney General Martha Coakley announced a $20 million settlement on Friday with Calloway Laboratories resolving allegations that the medical testing company gave unnecessary urine drug tests.

Calloway Laboratories Inc., Arthur Levitan, the company’s chief executive officer, Patrick Cavanaugh, its chief operating officer, and two employees of a sober house were indicted on 42 counts on July 2, 2010, by a Middlesex Grand Jury. The company allegedly engaged in a kickback scheme involving two straw companies funneling monetary incentives to employees at a medical office and multiple sober houses to illegally obtain urine drug screening business paid for by MassHealth, the Massachusetts Medicaid program.

“We allege that this kickback scheme was one of the most egregious abuses of the Medicaid program our office has handled,” Coakley said. “This agreement allows us to return significant and much needed funding to MassHealth and to taxpayers. We will continue to prosecute the individuals we believe were responsible for carrying out these serious allegations.”

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