BREAKING: Calloway Labs will close this month

Citing “unforeseen circumstances beyond the company's control” but not specifying further, Massachusetts-based toxicology lab Calloway Labs has announced that it will close operations on Oct. 16. The drug testing company is informing its healthcare clients of its decision this week and is advising them on other laboratories with which they may be able to work, according to a company statement.

Calloway in recent years had been at the center of increased scrutiny of clinical laboratories' government billing practices. Two former Calloway executives pleaded guilty in 2012 to orchestrating payments to recovery home operators in exchange for providing excessive drug tests that were billed to Medicaid. Calloway agreed that year to pay the state of Massachusetts $20 million in a legal settlement.

Cases involving Calloway and other toxicology labs led to a general call for addiction treatment facilities to use more caution in developing their relationship with outside testing companies.

At the end of 2012, Ampersand Capital Partners closed on a deal to acquire Calloway, a transaction that was expected to give the company the financial and management resources needed to build on its track record in promoting patient compliance in pain management and addiction treatment.

A short statement from Calloway says that its approximately 240 employees around the country will be paid through their last day with the company; it adds that all employees are in full control of their retirement funds. “The company is grateful to its clients and employees for their loyal support,” the statement reads. A company spokesman confirmed that the company is not commenting further on its decision.