Federal authorities notified Orem-based Nomi Health in mid-March that not only was its COVID-19 testing for the state of Utah not in compliance with government standards, “the deficient practices” identified with the help of the Utah Department of Health “pose immediate jeopardy to patient health and safety.”

A Centers for for Medicare and Medicaid Services spokesman who provided a copy of the March 16 letter notifying Nomi Health of the agency’s findings as well as a 16-page report detailing the deficiencies, confirmed Friday that “CMS is investigating Nomi Health Lab (CLIA #46D2199811) and its temporary testing sites.”

It is not clear whether sanctions have been proposed. According to the spokesman, generally when noncompliance is found, the facility is given an opportunity to respond and correct the cited deficiencies, but if it fails to do so, sanctions are proposed but can be challenged.

“CMS makes the ultimate enforcement decision about imposing sanctions,” the spokesman said.

The letter sent to Nomi Health spells out that the company had until March 26 to fix the issues identified and could face the suspension and revocation of its federal certificate, cancellations of Medicare and Medicaid payments, and civil penalties of more than $21,600 per day of violation.

Nomi Health said in a statement the federal regulatory program, known as Clinical Laboratory Improvement Amendments, or CLIA, “engaged us with specific improvements. Our clinical and quality team responded quickly and with rigor. It’s a federal process that is still underway, and we look forward to working together in this process.”

A spokesman for Nomi Health, which began offering for-profit COVID-19 testing following the end of the state’s free testing for most Utahns on Thursday, said the company was “limited to speak about all that’s going on with the federal government” but would discuss its issues with the state health department.

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Nomi Health’s contract with the state requires the company to “ensure that all collections are conducted in accordance with CLIA,” according to a statement by the Utah Department of Health. “UDOH regularly monitors performance and when concerns are raised, we inform Nomi of the concerns and implement a resolution process.”

The statement, issued Thursday amid reports of the federal investigation, said the state health department has “not seen the CMS report” but has requested a copy. A spokeswoman said Friday there was no update to that statement.

Nomi Health remains under contract to provide COVID-19 testing for the state should that be needed, as part of Gov. Spencer Cox’s “steady state” plan to treat COVID-19 like the flu or other diseases with limited outbreaks that shifted testing and treatment for the virus to private providers as of Friday.

“Since state-sponsored testing is paused for all vendors,” the state health department statement said, “we will use the time during this pause to review the issues raised in the CLIA report and Nomi’s response once we receive them and determine appropriate actions.”

The state’s contract with Nomi Health for COVID-19 testing, signed several months after the start of the pandemic in 2020, is not set to expire until July 2025. Each month, the company earns $75,000 to $125,000 per site, depending on the number of tests, plus an additional $8 per sample and $32,000 for a website and call center.

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Testing sites operated by Nomi Health in Bountiful, Millcreek, West Jordan, Park City, West Valley City and Logan were inspected and findings included test supplies meant to be kept at room temperature piled on top of duct tape and hand warmers, opened next to “yogurt; a bag of Cheez-Its; and rice cakes,” or left out in the cold.

Other issues focused on how the tests were being administered, including not properly timing when to check for results. The tests being used were the GenBody brand of rapid antigen tests that the state stopped using in early February because of a much higher rate of false negatives than expected.

Nomi Health’s statement, also issued Thursday, said the company rejects “any implication or insinuation by certain people inside the Utah Department of Health that the lack of efficacy of certain antigen tests is somehow unique to Nomi Health. It is not. Our national findings on antigen test efficacy were consistent with the State of Utah’s findings for certain tests, leading the state to halt antigen testing.”

But the investigation, conducted by state health department and the CMS Kansas City branch personnel, said based on observation of testing at all the sites inspected “and interviews with supervisors, management, and testing personnel, the laboratory failed to follow the manufacturer” instructions.