Averhealth, a drug testing company used by courts across the country to decide whether people go to prison or parents keep custody of their children, was investigated by the Department of Justice (DOJ) for fraud in 2022, according to emails obtained by VICE News.
Averhealth conducts millions of drug tests annually, working with courts and agencies in 34 states. The Department of Justice investigated the company as early as June 2021, according to emails between the Justice Department and the Michigan Department of Health and Human Services (MDHHS), one of the state agencies that contracts with Averhealth. The investigation was still active as of March 2022. The investigation prompted the Michigan Department of Health and Human Services to cease business relations with Averhealth, according to an internal email from the department.
The Justice Department's investigation gathered information on 2021 court testimony from former Averhealth laboratory director Sarah Riley, who said up to 30 percent of the results reported to Michigan's child welfare agency were incorrect, both false positives and false negatives. As VICE News previously reported, Riley testified that Averhealth botched quality control checks designed to ensure that lab instruments are properly calibrated. The company denies these claims.
The Justice Department declined to comment on the investigation, including whether it is complete or ongoing. Averhealth declined to say the same.
The Michigan Attorney General also investigated the company in 2021, according to an internal email from an attorney in the office involved in the investigation. The state Attorney General's Office declined to comment on the investigation.
Averhealth told VICE News that its contract with the Michigan Department of Health, which handles the state's child welfare cases, remains in place even though the state no longer sends samples for processing. The company also said that the Michigan Attorney General has not contacted it as part of an investigation.
Riley, a forensic toxicologist, was hired in September 2020 to oversee Averhealth's central laboratory, where samples are processed and tested. She resigned in November of that year. Riley also filed a complaint with Averhealth's accreditation officer, the College of American Pathologists, about what she considered unacceptable laboratory practices.
“I know that false positives have been reported as a result of these practices,” Riley testified.
In a statement to VICE News, Averhealth said the College of American Pathologists “concluded that Dr. Riley's allegations were without merit.” Averhealth also said the College of American Pathologists never asked them to correct any findings.
But a letter from the accreditation officer to Averhealth, seen by VICE News, shows that the College of American Pathologists did indeed confirm Riley's allegations.
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Riley's testimony in court was part of a case in which a mother challenged an Averhealth test that came back positive for cannabis in order to regain custody of her children. The mother submitted drug tests from an outside lab that came back negative for weed. But the judge ultimately ruled in favor of the prosecution and would not throw out the Averhealth results. The judge later revoked the mother's custody. Riley, who is now director of the forensic toxicology lab at Saint Louis University, declined to comment.
The emails, which reference the Justice Department and Michigan Attorney General's investigations, were released as part of a separate lawsuit filed in federal court in Missouri. Several parents are suing Averhealth after receiving false positives for cocaine and opiates from the company, leading to one of them losing visitation rights to their children.
“I have never used cocaine,” one parent wrote in an email to Averhealth quoted in the complaint. “These results are incorrect. I also lost my overnight stays with my children and now my visitation rights are supervised.”
Averhealth filed a motion to dismiss the original complaint in the Missouri case. An amended complaint was filed on January 25.
The Missouri lawsuit also included official letters and internal emails from the College of American Pathologists. In letters the accreditation officer sent to Averhealth, he placed Averhealth on probation for improper laboratory practices between January and July 2021 – and substantiated the allegations made by Riley.
These included concerns that Averhealth had unacceptable quality assurance on its mass spectrometry confirmatory testing and that it had tampered with the calibration of laboratory instruments. “They adopted acceptance criteria that have no scientific basis in good practice,” the College of American Pathologists' investigative analyst wrote in December 2020. After reviewing thousands of pages of data, the organization informed Averhealth in a January 29, 2021, letter that Riley's allegations were substantiated.
But in emails to the Michigan Department of Health in March 2021, Averhealth continued to claim that the problems Riley testified about did not exist, according to communications obtained by VICE News through a public records request.
“The facts prove that the allegations are completely unfounded,” the company wrote in an update to its customer – a month after its accreditation officer confirmed the opposite.
“Averhealth has been certified by CAP since 2016 and has maintained that certification without interruption since that date,” the company told VICE News in a statement. “In May 2021, CAP conducted an unscheduled inspection and identified some areas that needed improvement, which is common practice during inspections. Since then, we have successfully completed a CAP inspection in April 2022 and a Clinical Laboratory Improvement Amendments (CLIA) inspection in July 2022 with no deficiencies found.” The company also said it had retained an independent third-party auditor who found the findings were accurately reported.
In a statement to VICE News, the College of American Pathologists confirmed that Averhealth's laboratory is currently accredited and was last inspected on April 4, 2022.
Averhealth touts in court that it can handle the complicated business of drug testing more than 500,000 people more accurately and cost-effectively than its competitors. In addition to laboratory services, the company offers case management software, training for civil servants and expert opinions for authorities. It even claims that its proprietary analysis systems can predict when people being tested will relapse.
“The services offered by Averhealth are designed to help reunite families and promote child safety,” Averhealth told VICE News. “Courts and agencies making custody decisions do so based on a long list of factors over time.”
The Michigan Department of Health Services began contracting with Averhealth in 2019 because of its lower costs, according to emails obtained by VICE News through a public records request. But soon after the contract began, caseworkers and judges began complaining about discrepancies in outcomes, according to internal agency emails that VICE News has previously reviewed and reported on.
“We are having a difficult time working with Averhealth and do not trust them,” a Michigan Department of Health and Human Services director wrote to her colleagues in January 2021. “We make MAJOR decisions, including parents leaving home or being deported, and that is scary when you don't trust the person you are receiving services from. Is there another agency we can use?”
That same month, after complaints from judges about inaccurate results, Michigan hired two independent scientists to look into the problems. The scientists visited the lab and made suggestions for improvements, but ultimately concluded that Averhealth's results were scientifically sound, according to public records seen by VICE News. In their final report, the scientists wrote that Riley's allegations were “unfounded” and that they “observed no practices that support the allegations.” The scientists conducted a “comprehensive, independent review of the lab,” Averhealth said in a statement to VICE News.
But a year later, the Michigan Department of Health and Human Services suspended its $27 million contract with Averhealth and abruptly told child welfare workers to use other providers. According to a Michigan Department of Health and Human Services official, the state soon instructed its county offices to compile lists of every single child welfare case in which positive Averhealth tests had impacted the children's out-of-home placement. And in March 2022, an agency analyst estimated that at least 2,885 children in foster care had parents or caregivers with positive Averhealth drug tests, according to emails obtained by VICE News from the Missouri lawsuit.
Michigan had previously not commented to VICE News on the reasons for the sudden suspension, but an email sent by a special counsel to the director of the Children's Services Agency, cited in Missouri's lawsuit, states that the Justice Department's investigation was behind the decision.
The Michigan Department of Health and Human Services “has discontinued its use of drug testing company Averhealth after receiving information from the U.S. Attorney's Office that Averhealth was under investigation for medical fraud,” the consultant wrote to agency leaders in March 2022, days after Michigan suspended the contract.
The consultant also wrote that the Justice Department's investigation was motivated by the very issue Riley had testified about: improper calibration of laboratory instruments.”[Averhealth] have not complied with the national accreditation standards with regard to the calibration of test equipment, although they had agreed to do so in their contract.”
STATEMENT 1/27: The article has been updated to reflect that several parents are suing Averhealth in federal court in Missouri.
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