Drug-Testing Company Used in Child Custody Cases Investigated for Fraud

The DOJ investigated Averhealth, emails reviewed by VICE News show, after the company’s ex-lab director testified up to 30 percent of its results in Michigan were wrong.

Averhealth, a drug testing company used by courts around the country to decide whether people go to jail or parents retain custody of their children, was under investigation by the Department of Justice (DOJ) for fraud in 2022, according to emails reviewed by VICE News.

Averhealth runs millions of drug tests a year, working with courts and government agencies in 34 states. The DOJ was looking into the company as early as June 2021, according to emails between the DOJ and Michigan’s Department of Health and Human Services, (MDHHS), one of the state agencies that contracted with Averhealth. The investigation was still active as of March 2022. The probe led Michigan’s Department of Health and Human Services to stop doing business with Averhealth, according to an internal email at the department. 


The DOJ investigation gathered information about court testimony, given by Averhealth’s former lab director Sarah Riley in 2021, that up to 30 percent of the results reported to the state of Michigan’s child welfare agency were wrong, both false positives or false negatives. As VICE News previously reported, Riley testified Averhealth was botching the quality controls that ensure lab instruments are properly calibrated. The company denies those claims.

The DOJ would not comment on the investigation, including whether it was concluded or ongoing. Neither would Averhealth. 

The Michigan attorney general was also investigating the company in 2021, according to an internal email sent by a lawyer in the office involved with the investigation. The state attorney general’s office wouldn’t comment on the investigation. 

Averhealth told VICE News that its contract with Michigan’s Department of Health and Human Services, which handles the state’s child welfare cases, remains in place, although the state has stopped sending samples to process. The company also said that the Michigan attorney general had not contacted it as part of an investigation. 

Riley, a forensic toxicologist, was hired to oversee Averhealth’s central lab, where samples are processed and tested, in Sept. 2020. She quit in November that same year. Riley also filed a complaint with Averhealth’s accreditor, the College of American Pathologists, about what she said were unacceptable lab practices. 


“I know that there were false positives reported based on the practices,” Riley testified. 

In a statement to VICE News, Averhealth said the College of American Pathologists “determined that Dr. Riley’s allegations were unfounded.” Averhealth also said the College of American Pathologists never asked them to correct any results. 

But a letter from the accreditor to Averhealth, reviewed by VICE News, shows that the College of American Pathologists actually substantiated Riley’s allegations.

Do you have information about Averhealth’s tests? You can reach out to Alice Hines via email at or securely on Signal at +1.814.621.3116.

Riley’s court testimony was part of a case in which a mother contested a test from Averhealth that came back positive for cannabis, in an effort to regain custody of her kids. The mother submitted drug tests, which came back negative for weed, from an external lab. But the judge ultimately sided with the prosecutor and wouldn’t throw out Averhealth’s results. The judge later terminated the mother’s parental rights. Riley, who’s now director of the forensic toxicology laboratory at Saint Louis University, declined to comment.

The emails referencing the DOJ and Michigan attorney general’s investigations were made public as part of a separate lawsuit in Missouri federal court. Multiple parents are suing Averhealth after they say they received false positive results for cocaine and opiates from the company. One of them subsequently lost visitation rights to their children. 


“I have never used cocaine,” one parent wrote in an email to Averhealth, cited in the complaint. “These results are not accurate. I also lost my overnights with my children and now my visitation is supervised.”

Averhealth filed a motion to dismiss the original complaint in the Missouri lawsuit. An amended complaint was filed on Jan. 25.

The Missouri lawsuit also contained official letters and internal emails from the College of American Pathologists. In letters the accreditor sent to Averhealth, it placed Averhealth on probation between January and July of 2021 due to improper lab practices—and substantiated allegations made by Riley. 

Those included concerns that Averhealth had unacceptable quality assurance in its mass spectrometry confirmatory tests, as well as that it had manipulated the calibration of lab instruments. “They have adopted acceptance criteria that has no scientific foundation in good practice,” wrote the College of American Pathologist’s investigations analyst, in Dec. 2020. After reviewing thousands of pages of data, the organization informed Averhealth in a letter on January 29, 2021, that Riley’s allegations were substantiated. 

But, in emails to Michigan’s Department of Health and Human Services in March 2021, Averhealth continued to say that the issues Riley testified about were non-existent, according to communications obtained by VICE News in a public records request.


“Facts prove that the allegations have no basis,” the company wrote in an update to its client—one month after its accreditor substantiated the opposite.

“Averhealth has been certified by CAP since 2016 and has maintained this certification without interruption since that date,” the company told VICE News in a statement. “A non-routine inspection was conducted by CAP in May 2021 and a few areas were identified that needed improvement, which is common in inspections. Since then, we have successfully completed a CAP inspection in April 2022 and a CLIA (Clinical Laboratory Improvement Amendments) inspection in July 2022 with zero deficiencies.” The company also said it had retained an independent third party auditor that determined results were accurately reported.

In a statement to VICE News, the College of American Pathologists confirmed that Averhealth’s laboratory is currently accredited and that it was last inspected on April 4, 2022. 

Averhealth’s pitch to courts is that it can manage the messy business of drug testing more than 500,000 people more accurately than competitors and for a low cost. In addition to lab services, the company provides case management software, training to state employees, and expert testimony to agencies. It even says its proprietary analytics can predict when people being tested will relapse. 

“The services provided by Averhealth are designed to help unify families and promote child safety,” Averhealth told VICE News in a statement. “Courts and agencies that make child custody decisions do so based on a long list of factors over time.”


Michigan’s Department of Health and Human Services began contracting with Averhealth in 2019, because of its lower cost, according to emails obtained by VICE News in a public records request. But soon after the contract started, case workers and judges began complaining about discrepancies in results, according to internal agency emails previously reviewed and reported by VICE News.

“We are struggling to do casework with Averhealth and don’t trust them,” one Michigan Department of Health and Human Services supervisor wrote to her colleagues in January 2021. “We are making BIG decisions, including having parents leave home or removal, and that’s scary to do when you don’t trust who you’re getting services from. Is there a different agency we can use?”

That same month, after complaints from judges about inaccurate results, Michigan hired two independent scientists to look into issues. The scientists visited the lab and made recommendations for improvement but ultimately determined that Averhealth’s results were scientifically sound, according to public records reviewed by VICE News. The scientists wrote in their final report that Riley’s allegations were “unsubstantiated” and that they did not “observe any practices that support the allegations." The scientists made an “exhaustive, independent review of the lab,” Averhealth said to VICE News in a statement. 

But a year later, Michigan’s Department of Health and Human Services suspended its $27 million contract with Averhealth, abruptly telling child welfare workers to use other providers. The state soon instructed its county offices to compile lists of every single child welfare case where positive Averhealth tests had had an impact on childrens’ out of home placements, according to an employee within Michigan’s Department of Health and Human Services. And in March 2022, according to emails reviewed by VICE News from the Missouri lawsuit, an analyst at the agency estimated at least 2,885 children in foster care had parents or caregivers with positive drug tests from Averhealth. 


Michigan had previously declined to comment to VICE News as to the reasons for the sudden suspension. But an email, sent by a special advisor to the Children’s Services Agency director and cited in the Missouri lawsuit, states that the DOJ investigation was behind the decision. 

Michigan’s Department of Health and Human Services “discontinued the use of Averhealth drug testing company after receiving information from the U.S. attorney that Averhealth was under investigation for medical fraud,” the advisor wrote to agency leaders, in March 2022, a few days after Michigan suspended its contract. 

The advisor also wrote that the DOJ’s investigation was motivated by the very issue Riley had testified about: improper calibration of lab instruments. “[Averhealth] were not complying with national accreditation standards as it related to calibration of testing devices despite agreeing to do so in their contract.” 

CLARIFICATION 1/27: The story has been updated to reflect that multiple parents are suing Averhealth in Missouri federal court. 

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