Carolina Liquid Chemistries Wins Summary Judgment, Defeating False Claim Act Allegation

February 1, 2023

Headquarters - Carolina Liquid Chemistries Corp. in Greensboro, NC

GREENSBORO, NC — (Feb. 1, 2023) – Carolina Liquid Chemistries Corp. (CLC) won a major victory securing summary judgment in a high-value, long-running False Claims Act case in the Northern District of California in which the “relators” who filed the suit sought treble damages.  The “relators” were competitors of CLC at the time they filed the lawsuit with no inside knowledge of the company.

North Carolina-based CLC is a leading provider of chemistry analyzers and reagents for drug testing and general chemistry testing. The company has been supplying laboratories for over 25 years. In their qui tam suit initially filed in 2013, two relators alleged that CLC customers engaged in so-called “upcoding” — overbilling Medicare and Medicaid by claiming that the company’s urine drug test machines are capable of performing high-complexity quantitative drug testing, which is reimbursed at higher amounts, when instead the machines could perform only qualitative testing. The relators also alleged that CLC’s devices lacked FDA approval and, thus, claims submitted to government payors for tests performed on these devices were false.

After the defense won the dismissal of two earlier versions of the complaint, the relators filed a third amended complaint in January 2020, which withstood a motion to dismiss. Following extensive discovery, the defense team moved for summary judgment in July 2022. On December 20, 2022, U.S. District Judge Jon Tigar granted judgment for CLC, dismissing all claims against the company — a rare outcome in a federal FCA case in which a competitor purported to have direct, inside evidence of wrongdoing.  Instead, the judge found that, “Relators thus fail to identify any evidence linking Carolina Liquid to the submission of a false claim.”  The judge further found that CLC’s devices and reagents were in fact properly FDA cleared.

CLC continues to offer efficient, accurate, and fast chemistry systems for clinical laboratories of all sizes. For clinical laboratories in physicians’ offices, urgent care centers and emergency rooms, CLC has easy to use benchtop systems. For large hospitals and reference labs, CLC offers high throughput floor model chemistry systems.

Attorneys Walter Holton and Cheryl Andrews McDonald of The Holton Law Firm in Winston-Salem represented CLC, along with Randy Luskey of Paul-Weiss in San Francisco.  For further information please contact Walter Holton at (336) 777-3480 or [email protected].

About Carolina Liquid Chemistries Corp.

Headquartered in Greensboro, NC, Carolina Liquid Chemistries Corp. (CLC) is an FDA registered manufacturer, re-packager, re-labeler and value-added reseller of chemistry systems and reagents, as well as COVID-19 tests and supplies. CLC helps clinical laboratories of all sizes reduce chemistry analyzer and reagent costs, while also receiving accurate and timely results. For more information, visit or email [email protected].