Facing Lawsuit Filed by Humana, Ameritox Closes Lab, Sells Assets

Urine drug testing and drug-monitoring company puts assets up for sale, sets closing of two facilities

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IN MAY, THE LONG-STRUGGLING Ameritox, LLC, is scheduled to close its laboratory in Greensboro, N.C., according to reporting in the Triad Business Journal. Early this month, the drug-monitoring and urine-analysis company filed a notice with the North Carolina Department of Commerce that it would close the lab and lay off 113 workers.

Also, the company will close its headquarters in Columbia, Md., and lay off 99 employees there, according to The Baltimore Business Journal.

In the notice to North Carolina officials, Ameritox CEO Todd Gardner wrote, “The reason for the closure is an asset sale of tangible assets and closure of all company operations and facilities.”

In addition to the operations in Maryland and North Carolina, Ameritox has a facility in Midland, Texas, where the company was founded in 1996, the TBJ reported and it was unclear if the Texas facility would close.

TBJ speculated that the closures could be one result from a lawsuit that Humana filed against Ameritox in which the health insurer alleged that Ameritox filed millions of dollars worth of false claims. A jury is scheduled to hear the case next year in U.S. District Court for the Middle District of North Carolina.

One lab executive familiar with Ameritox said that the venture capital funding companies that had backed Ameritox sought to sell the company last fall in a bid to keep the company open. The lab executive did not wish to be named. “The word is that the funding companies were unable to come to terms with any of the bidders for a sale,” the lab executive said.

Funders Split Assets

Unable to sell the company, the funders are believed to have purchased a portion of the book of business and hired the company’s sales staff that was associated with that portion of the business. The website Crunchbase lists two venture capital funding companies for Ameritox, Bain Capital Ventures and Sequoia Capital.

In a complaint filed July 28, 2016, Humana said it was seeking to recover millions of dollars it allegedly overpaid Ameritox for services that weren’t covered under its health plans, Bloomberg Law reported. “Ameritox LLC fraudulently sought and received substantial payments from Humana by submitting ‘false and fraudulent claims’ for urine testing services Ameritox knew or should have known weren’t covered,” according to an article by Carmen Castro-Pagan.

Allegations of fraud and abusive business practices have dogged this drug testing company for years. In 2010, Ameritox settled one federal whistleblower lawsuit and agreed to pay $16.3 million, while not admitting nor denying the charges.

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