How A COVID-19 Testing Company Evaded Government Scrutiny for More Than Three Months

What emerges is evidence of a country in desperation: The scarcity of tests across the U.S. has created a system where overnight startups can make large amounts of money billing the federal government for services over which regulators have little oversight.

On an early January morning, Jordan Zandi felt terrible. So he went to the only COVID-19 testing site he could find that didn’t require an appointment.

He stood in a line that doubled back on itself because it was so long. People inched toward a shed and a plastic folding table plunked in the parking lot of Johnson Creek Market, a convenience store deep in Southeast Portland.

The site didn’t inspire confidence. He gave the testing company his personal information and was told to swab his own nose in his car. Then he dropped his sample into a plastic bin.

“There’s a little plastic bin that you put that in. There were a bunch of other bags in there,” Zandi says. “There’s no disposable area for your swab. I ended up just taking it home and putting it in the trash.”

Zandi tested negative. But he was certain he had COVID. He had night sweats and severe body aches. He went back a week later and tested negative again.

The setup, Zandi says, was clearly makeshift, and its workers seemed to know little. But Zandi didn’t think much about it: “Everything was so ragtag around the pandemic anyway.”

Last week, WW reported the Oregon Department of Justice had launched an investigation into Center for Covid Control, the company that operated the testing site Zandi visited.

Justice officials launched the probe three months after they received two complaints about the Illinois-based company from Oregonians. The embattled company, which coordinates 300 sites across the country, is under investigation in nearly a dozen other states.

In some cases, according to news reports across the country, patients said they waited weeks for results. In other cases, they said they were emailed results before they took the test.

WW could find no pending legal actions against the company.

In addition, the Oregon Health Authority told WW last week it had received no test results from the company or its partner lab since it began operating as early as October—a violation of state and federal law.

If true, that means thousands of Portlanders took tests for COVID-19 whose results are now in question. And it means state officials never saw a significant number of COVID test results as the Omicron wave began.

Federal, state and local officials have said little about their investigations, even after the feds gave Center for Covid Control’s lab partner—which appears to be run by the company—more than $100 million.

Though the company decided to close its sites for a week citing staffing shortages, it’s not clear whether it will resume operations in Oregon.

Over the past week, WW has examined how a company could slip through the cracks of regulatory agencies for months while thousands of Portlanders took tests, trusting their results were accurate.

What emerges is evidence of a country in desperation: The scarcity of tests across the U.S. has created a system where overnight startups can make large amounts of money billing the federal government for services over which regulators have little oversight.

ARE THESE LABS REGULATED?

Normally, any diagnostic testing site or lab must be federally certified. That certification is governed by the 1988 Clinical Laboratory Improvement Amendments to the Public Health Service Act, or CLIA for short.

But in 2020, amid the public health emergency of the pandemic, the federal government made an exception allowing companies to operate multiple temporary mobile sites for COVID-19 testing under a single certificate. Federal guidance doesn’t put a limit on the number of mobile sites that can operate under one certificate.

Databases tracking such certificates show only one for the company.

Experts in CLIA certification feel Center for Covid Control stretched the intent of the exemption. Dr. David Ku, an internal medicine doctor who directs multiple labs, says it should not apply to one company with 300 different sites, especially if not all are mobile. (One of the Portland sites is a storefront in the Hollywood neighborhood.)

“You cannot make an argument that these are temporary labs, because these places have storefronts,” says Ku. “It’s absolutely a violation.”

The Centers for Medicare & Medicaid Services oversees CLIA certificates, but the federal agency’s office in Seattle declined to furnish WW with even basic facts about certification.

USA Today reported over the weekend that CMS inspected Doctors Clinical Laboratory late last year—the lab CCC claims to partner with to process its PCR tests but which, according to USA Today’s reporting, is effectively run by CCC— and found that the lab was out of compliance. It also visited several testing sites. That investigation is ongoing.

SO WHO CHECKS IF THE RULES ARE BEING FOLLOWED?

There is little oversight of testing sites such as those operated by Center for Covid Control.

Reporting testing results to local health authorities is required by state and federal law. But it appears OHA was aware of the company: Spokesman Rudy Owens said last week that “We have received complaints about this company and referred them to the Oregon Department of Justice for investigation.” He added that sites must notify the state if they’re functioning as a testing site, but did not say whether the company had done so.

Owens said Doctors Clinical Laboratory “is on OHA’s list to onboard for [electronic reporting], and we are waiting for additional information from this laboratory to begin the onboarding process.”

It’s impossible to know just how many tests went unreported to the state over the past three months. But the company said last week it performed 80,000 tests a day nationwide during the Omicron surge.

State health officials and the Centers for Medicare & Medicaid Services pointed fingers at each other when asked who is supposed to maintain records on testing sites. What is clear is that the more basic the test the sites do, the less oversight government agencies provide.

Center for Covid Control has a “waived” certificate, intended for sites doing low-complexity tests—even though the company was doing moderate-complexity antigen rapid tests and PCR tests (That’s another exception the feds made for COVID-19 testing sites because of the pandemic.)

The feds also expedited the certification process for COVID-19 sites. “They’ve been giving CLIA certificates out like water,” says Ku.

Waived sites get no regular checkups, whereas facilities with a higher certificate do undergo normal checkups and evaluations.

“I think the public health agencies need to go to every single one of these pop-ups,” says Ku. “My opinion is that these could be shut down immediately, but a lot of public health agencies just don’t have teeth.”

The Oregon Department of Justice received its first complaint about a Center for Covid Control site Oct. 3. It opened its investigation three months later—just as news broke nationally that the company was under scrutiny.

“Many times we do not open a formal file until we are able to gather more information or we receive a pattern of complaints. The additional information leading to opening a formal file...was not received until this week,” says ODOJ spokeswoman Kristina Edmunson, who told WW another testing company had been added to the CCC investigation. “We logged the information we had—which was not enough to open a separate investigation at that time—with the other related case.”

HOW IS THE COMPANY MAKING MONEY?

Last week, experts including Ku told WW that the company was likely billing the federal government for test services.

That was confirmed by independent journalist Michael Figueroa, who reported the lab received $124 million from a federal program that pays companies that provide testing for the uninsured. The story was picked up by USA Today.

WW asked United Healthcare, the company cutting checks for the federal program, last week if CCC or the lab had been paid for tests. United never responded.

(Last week, a page on the company’s website advertised a guaranteed PCR result within 24 hours if you paid $100. That page is now password protected.)

Portlanders who took a test at one of the three Portland-area sites say they were asked to fill out insurance information if they had it.

Opal Brockschmidt did. They filled in their Oregon Health Plan policy number online. “They said they were going to bill insurance for the test,” Brockschmidt says.

Oregon Health Plan declined to say whether it had been billed by Center for Covid Control or its lab, citing member confidentiality.

WHO’S BEHIND THE PORTLAND POP-UPS?

Until last week, Center for Covid Control operated three locations locally.

The site in Southeast Portland is in the parking lot of the Johnson Creek Market. WW spoke to an employee of the market, who said the operator of the site was a friend of the store manager and denied there was any wrongdoing.

“That’s a complete lie,” he said when told the state had received no results. As WW was leaving, he said, “That’s bullshit, fuck that. Use your mind.”

A webpage run by Center for Covid Control, which is now password protected, says it’s searching for “testing site owners” and encourages interested parties to reach out to its franchisee department.

On that same page was a list of all the sites the company said were opening soon. Two new Portland-area sites were listed: an empty storefront at 1541 W Burnside St. and an address in Tigard.

WW visited the Tigard address, which was a light blue house in the suburbs. Two men answered the door, both in their 30s or 40s.

One of the men spoke with WW for 10 minutes, but declined to give his name. He said he had been the manager of the Tigard site and allowed the company to list his home address as a site temporarily. He said his home was not a site, nor was it going to be.

He said he told the company to remove hisaddress. (Later, that same page became password protected.)

We asked how he found the work: “I just looked around,” he replied. “I don’t know. I just got it.”

He offered to make a bet with this reporter about whether he company would get in regulatory trouble. We declined. He said the offer stood: “You know where I live.”